What AT&T’s media fallout merger will mean for shareholders

After a disappointing performance in January, US equities traded higher to start February despite lingering concerns about inflation and rising interest rates.

On Friday, the Labor Department announced that the US economy had grown 467,000 jobs in January, beating economists’ estimates of 150,000 jobs. Wages rose 5.7% year-on-year in January, adding to pressure on the Federal Reserve to aggressively raise interest rates from March.

West Texas Intermediate Crude Oil Prices exceeded $90 per barrel for the first time since 2014 last week, pushed higher by a winter storm in Texas and worries about possible supply disruptions if Russia invades Ukraine. Oil prices rose even after OPEC and its Russian-led allies agreed to increase oil production by 400,000 barrels a day.

On Tuesday, AT&T announced that it would be spinning its WarnerMedia unit as part of a previously announced $43 billion deal to merge its media business with Discovery. AT&T said it plans to cut its dividend by nearly 50% and its shareholders will own 71% of the new Discovery-WarnerMedia company.

Shares of Google’s parent company Alphabet traded higher after the company reported a fourth-quarter earnings beat and said it would implement a 20 to 1 stock split. The split is subject to shareholder approval and will be implemented on July 15.

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Shares of Facebook and Instagram’s parent Meta Platforms fell 26% on Thursday after the company released a disappointing 2022 forecast and said changes to Apple’s privacy policies would cost $10 billion dollars in revenue to Meta this year.

In the week ahead, the fourth quarter earnings season continues with reports from Pfizer and BP on Tuesday and Walt Disney and CVS Health on Wednesday.

S&P 500 profit margins fell from 12.9% in the third quarter to 12% in the fourth quarter as inflation continued to weigh on earnings, according to to FactSet.

Economic figures

Following the encouraging jobs report, Wall Street will receive more economic updates on Thursday when the US Department of Labor releases its January consumer price index and on Friday when the University of Michigan releases its preliminary sentiment index. Michigan consumers in February.

Benzinga is a financial information and data company headquartered in Detroit.

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