By Aditya Soni

(Reuters) -Microsoft on Thursday briefly overtook Apple as the world’s most valuable company for the first time since 2021 after the iPhone maker’s shares made a weak start to the year on growing concerns over demand.

Microsoft’s shares have risen sharply since last year, thanks to the early lead the company has taken in generative artificial intelligence through an investment in ChatGPT-maker OpenAI.

Microsoft’s stock closed 0.5% higher, giving it a market valuation of $2.859 trillion. It rose as much as 2% during the session and the company was briefly worth $2.903 trillion.

Shares of Apple closed 0.3% lower, giving the company a market capitalization of $2.886 trillion. Microsoft and Apple have jostled for top spot over the years.

“It was inevitable that Microsoft would overtake Apple since Microsoft is growing faster and has more to benefit from the generative AI revolution,” said D.A. Davidson analyst Gil Luria.

Microsoft has incorporated OpenAI’s technology across its suite of productivity software, a move that helped spark a rebound in its cloud-computing business in the July-September quarter.

Apple, meanwhile, has been grappling with weakening demand, including for the iPhone, its biggest cash cow. Demand in China, a major market, has slumped as the country’s economy makes a slow recovery from the pandemic and a resurgent Huawei chips away at its market share.

“China could be a drag on performance over the coming years,” brokerage Redburn Atlantic said in a client note on Wednesday, downgrading Apple’s shares to “neutral”.

At least three of the 41 analysts covering Apple have lowered their ratings since the start of 2024.

Shares of Cupertino, California-based Apple have fallen 3.3% in January as of the last close, compared with a 1.8% rise in Microsoft.

Both stocks are expensive in terms of their share price-to-earnings (PE) ratio, a common method of valuing publicly listed companies.

Apple is trading at a forward PE of 28, well above its average of 19 over the past 10 years, according to LSEG data.

Microsoft is trading around 31 times forward earnings, above its 10-year average of 24.

Shares of Apple, whose market capitalization peaked at $3.081 trillion on Dec. 14, ended last year with a gain of 48%. That was lower than the 57% rise posted by Microsoft.

Microsoft has briefly taken the lead over Apple as the most valuable company a handful of times since 2018, including in 2021 when concerns about COVID-driven supply chain shortages hit the iPhone maker’s stock price.

Currently, Wall Street is more positive on Microsoft. The company has no “sell” rating and nearly 90% of the brokerages covering the company recommend buying the stock.

Apple has two “sell” ratings and only two-thirds of the analysts covering the company rate it a “buy”.

(Reporting by Aditya Soni in Bengaluru; Additional reporting by Jaspreet Singh; Editing by Shounak Dasgupta and Shweta Agarwal)

By Chuck Mikolajczak

NEW YORK (Reuters) -U.S. stocks closed little changed on Thursday as news of hotter-than-expected inflation and signs of labor market strength dampened hopes for early interest rate cuts by the Federal Reserve this year, but a fall in Treasury yields kept declines in check.

Equities opened higher and the benchmark S&P 500 briefly surpassed its record closing high of 4,796.56, hit in January 2022, before erasing initial gains.

After ending 2023 with a strong rally, stocks have struggled to find upward momentum, with the S&P 500 roughly unchanged on the year, as mixed economic data and Fed officials’ comments have led investors to scale back expectations for the timing and size of any rate cuts from the U.S. central bank this year.

The U.S. Labor Department reported that consumer prices rose more than expected in December, with Americans paying more for shelter and healthcare. A separate report showed the number of people filing new claims for unemployment benefits unexpectedly fell last week to 202,000.

“They’re just understanding it for what it was, the thing that pushed it up was primarily shelter,” said Scott Ladner, chief investment officer at Horizon Investments in Charlotte, North Carolina.

“Nobody believes that is going to be a persistent go-forward problem apart from inflation so, the thing that drove the ‘hot print’ was something that everybody’s kind of discounting.”

Comments from some Fed officials have pushed back on potential rate cuts. On Wednesday, Federal Reserve Bank of New York President John Williams said it was too soon to call for rate cuts as the central bank still had some distance to go on getting inflation back to its 2% target.

Cleveland Fed President Loretta Mester said on Thursday the path of inflation back to the 2% target rate reflected in the latest CPI figures meant it was likely too soon to cut rates in March. Richmond Fed President Tom Barkin said he was still waiting to be convinced the pace of price increases will stabilize and inflation gains have been too narrowly focused on goods.

According to preliminary data, the S&P 500 lost 3.17 points, or 0.07%, to end at 4,780.28 points, while the Nasdaq Composite gained 0.54 points, or 0.00%, to 14,970.19. The Dow Jones Industrial Average rose 14.20 points, or 0.04%, to 37,708.65.

A fall in Treasury yields helped keep losses for equities in check, after an auction of $21 billion in 30-year bonds was well received.

Microsoft briefly overtook Apple as the world’s most valuable company, after the iPhone maker’s shares dropped nearly 4% since the year began due to concerns over falling demand. Microsoft’s shares rose slightly, while Apple fell modestly.

Nearly all of the S&P 500’s 11 major sectors declined, with only energy and technology in positive territory.

Crypto stocks such as Coinbase , Bitfarms and Riot Platforms reversed early gains and turned lower. The U.S. securities regulator approved the first U.S.-listed exchange-traded funds (ETF) to track spot bitcoin late on Wednesday.

Citigroup fell after a filing showed the lender booked about $3.8 billion in combined charges and reserves that will erode its fourth-quarter earnings, due to be reported on Friday.

Other banks like JPMorgan Chase, Bank of America and Wells Fargo were all lower ahead of their earnings reports on Friday.

(Reporting by Chuck Mikolajczak; Editing by Richard Chang)

By David Shepardson

WASHINGTON (Reuters) -The U.S. Federal Aviation Administration is launching a formal investigation into the Boeing 737 MAX 9 after a cabin panel blew off an Alaska Airlines flight last week in mid-air, forcing an emergency landing, the regulator said on Thursday.

The FAA has grounded 171 Boeing jets with the same panel pending safety inspections. Most are operated by U.S. carriers Alaska Airlines and United Airlines <UAL.O>.

The incident was the latest in a series of events that have shaken confidence in the aircraft manufacturer. Talks continued on Thursday between Boeing, the FAA and airlines on revised inspection and maintenance instructions from Boeing that the FAA must approve before airlines can resume flying the planes.

The FAA said the Alaska Airlines incident “should have never happened and it cannot happen again.” It told Boeing of the investigation in a letter on Wednesday “to determine if Boeing failed to ensure completed products conformed to its approved design and were in a condition for safe operation” under FAA rules. The agency cited “additional discrepancies” in other 737 MAX 9 planes.

“We will cooperate fully and transparently with the FAA and the NTSB on their investigations,” Boeing said in a statement.

Boeing shares were down 1.8% on Thursday. They are down more than 10% since the incident.

On Monday, both Alaska and United said they had found loose parts on multiple grounded aircraft during preliminary checks, raising new concerns about how Boeing’s best-selling jet family is manufactured. The two carriers have canceled hudndreds of flights since Saturday with the planes grounded, with United canceling about 200 and Alaska Air 158 on Thursday.

A growing number of U.S. lawmakers expressed broader concerns about Boeing and questions about its manufacturing quality control.

“Given the previous tragic crashes of Boeing 737 Max aircraft, we are deeply concerned that the loose bolts represent a systemic issue with Boeing’s capabilities to manufacture safe airplanes,” wrote Senators Ed Markey, JD Vance and Peter Welch to Boeing CEO Dave Calhoun.

Boeing declined to comment on the letter. On Tuesday, Reuters reported that the planemaker told staff the findings were being treated as a “quality control issue” and checks were under way at Boeing and supplier Spirit AeroSystems.

Calhoun told CNBC on Wednesday that a “quality escape” was at issue that led to the MAX 9 being in the air that suffered the cabin blowout.

The Alaska Airlines flight, which had been in service for just eight weeks, took off from Portland, Oregon, on Friday and was flying at 16,000 feet (4,900 m) when the panel tore off the plane. Pilots returned the jet to Portland, with only minor injuries suffered by people on board.

Boeing’s manufacturing practices “need to comply with the high safety standards they’re legally accountable to meet,” the FAA said.

On Wednesday, U.S. Transportation Secretary Pete Buttigieg declined to say when the FAA may allow the planes to resume flights but said Boeing must ensure its planes are “100% safe.”

“The only consideration on the timeline is safety,” Buttigieg told reporters. “Until it is ready, it is not ready. Nobody can or should be rushed in that process.”

In 2019, global authorities grounded all MAX planes for 20 months after 346 people died in crashes in Ethiopia and Indonesia linked to poorly designed cockpit software.

The crisis eroded Boeing’s 50% share of the passenger jet market and the company ended 2023 in second place behind rival Airbus in aircraft deliveries for the fifth year running.

On Thursday, Airbus posted record annual jet orders, booking nearly 2,100 net new orders in 2023 while Boeing booked 1,314 net new orders. Airbus CEO Guillaume Faury told reporters it was closely monitoring the investigation of its rival.

“We will be taking each and every learning and we would expect Spirit to do exactly the same,” he added.

Brazilian airline Gol said quality issues across the aviation industry must be assessed and risk mitigation plans put in place.

Panama’s civil aviation authority said it had temporarily prohibited operations of 21 of Copa Airlines’ Boeing 737 MAX 9.

(Reporting by David Shepardson, Editing by Franklin Paul, Marguerita Choy and David Gregorio)

By Jack Queen and Luc Cohen

NEW YORK (Reuters) -Donald Trump on Thursday accused the New York judge in his civil fraud trial of “having your own agenda” – and the judge told his lawyer to control his client – as a months-long case that could hobble the former U.S. president’s business empire neared its end.

During a contentious final day of the trial in Manhattan, Trump once again tangled with Justice Arthur Engoron, who is considering what penalties to impose after earlier finding that Trump’s company inflated his net worth to win better financing terms.

“You have your own agenda. I understand that you can’t listen for more than one minute,” Trump said in court, as he denied wrongdoing and repeated claims of political persecution.

Trump’s legal team and the office of New York Attorney General Letitia James made closing arguments in a case accusing him of inflating his net worth to dupe banks. Kevin Wallace, a lawyer from her office, said Trump’s company issued false financial statements every year between 2011 and 2021.

“Fraud was central to the operation of the Trump Organization’s activities,” Wallace told the judge.

Trump and Engoron have clashed repeatedly over the course of the trial. Engoron, who earlier on Thursday had faced a security threat at his suburban home, did not appear to be impressed with Trump’s argument.

“Please control your client,” the judge told Trump’s lawyer, Christopher Kise.

Engoron had earlier reacted skeptically to Kise’s argument that Trump should not be penalized for allegedly manipulating the value of his properties because lenders and insurers that did business with him still turned a profit.

“There does not have to be any evidence of harm,” Engoron said.

Engoron also said he did not find a defense witness to be credible.

New York Attorney General Letitia James, who brought the case, is seeking nearly $370 million and a lifetime ban on Trump from the state’s real-estate industry.

Trump is the frontrunner for the Republican nomination to challenge Democratic President Joe Biden in the November election.

Shortly before Trump’s legal team concluded its arguments, Alina Habba, another of his lawyers, pointed out that James pledged to scrutinize Trump’s business practices while she was campaigning for office as a Democrat. Engoron said that was not relevant to the case.

The trial’s closing arguments took place in an atmosphere of heightened security after media outlets reported a bomb threat at Engoron’s suburban home. The judge has been a frequent target of Trump’s criticism.

SECURITY ISSUES

Security has been an issue throughout the months-long trial. Engoron’s top staffer faced threats after Trump criticized her as politically biased, prompting the judge to issue a gag order barring him from disparaging court staff. Trump has been fined $15,000 for twice violating the order.

As James arrived at the courthouse, onlookers cheered and chanted, “Thank you, James.” Police stood guard and tightly controlled entrances to the building.

Trump repeated his claims of political persecution and accused Biden, without offering evidence, of orchestrating the lawsuits and criminal cases against him.

“I’m going to go to all of my trials,” Trump said at a news conference at one of the buildings he owns. “This is their new form of cheating.” Supporters chanted his name as he left.

Trump has pleaded not guilty in four criminal prosecutions, including two that charge him with unlawfully trying to overturn his 2020 election loss to Biden. All could go to trial before this year’s election.

Engoron will issue a verdict at a later date without a jury. He found Trump liable for fraud in September, leaving the trial to focus largely on how much money Trump should surrender as ill-gotten gains.

Trump has appealed Engoron’s prior order and is almost certain to appeal any verdict against him, which could delay a final judgment for many months to a year or more.

Throughout trial, the state’s lawyers sought to show that Trump consistently overvalued many of the towers, golf clubs and other assets that burnished his reputation as a business mogul before he entered politics.

Trump admitted to providing inaccurate property valuations during defiant and meandering testimony in November.

Kise argued on Thursday that any alleged manipulation was harmless. Kise said banks and insurers would have been eager to do business with Trump even if his net worth was far lower, Kise said.

“He’s a whale client,” Kise said.

The trial earlier featured a tense face-to-face reunion between Trump and his onetime lawyer and fixer Michael Cohen, who testified that Trump directed him to manipulate asset values. Kise on Thursday called Cohen a “serial liar.”

A lawyer for Trump’s adult children Donald Jr. and Eric, who are also defendants in the case, told the judge there was no evidence that they were significantly involved in the financial statements.

“This is a press release wrapped up in a lawsuit,” lawyer Clifford Robert said of the case brought by the attorney general.

Republican voters in Iowa and New Hampshire will be the first to decide their preferred nominee this month to face Biden. Trump’s legal troubles have not diminished his commanding lead over party rivals.

(Reporting by Jack Queen and Luc Cohen; additional reporting by Brendan O’Brien and Susan Heavey; Writing by Andy Sullivan; Editing by Noeleen Walder, Will Dunham and Daniel Wallis and Chizu Nomiyama)

By Chuck Mikolajczak

(Reuters) -U.S. stocks fell on Thursday as news of hotter-than-expected inflation and signs of labor market strength dampened hopes for early interest rate cuts by the Federal Reserve this year.

Equities opened higher and the benchmark S&P 500 briefly surpassed its record closing high of 4,796.56, hit in January 2022, before erasing initial gains.

After ending 2023 with a strong rally, stocks have struggled to find upward momentum, with the S&P 500 slightly negative on the year, as mixed economic data and Fed officials’ comments have led investors to scale back expectations for the timing and size of any rate cuts from the U.S. central bank this year.

The U.S. Labor Department reported that consumer prices rose more than expected in December, with Americans paying more for shelter and healthcare. A separate report showed the number of people filing new claims for unemployment benefits unexpectedly fell last week to 202,000.

“Today’s inflation report reinforces the notion that the market had gotten a little overexcited around the timing of rate cuts,” said Seema Shah, chief global strategist at Principal Asset Management in London.

“These are not bad numbers, but they do show that disinflation progress is still slow and unlikely to be a straight line down to 2%. Yet, while the market was probably over-enthusiastic in its initial expectations, the stars should finally align for Fed cuts – most likely around mid-year.”

Comments from some Fed officials have pushed back on potential rate cuts. On Wednesday, Federal Reserve Bank of New York President John Williams said it was too soon to call for rate cuts as the central bank still had some distance to go on getting inflation back to its 2% target.

Cleveland Fed President Loretta Mester said on Thursday the path of inflation back to the 2% target rate reflected in the latest CPI figures meant it was likely too soon to cut rates in March. Richmond Fed President Tom Barkin said he was still waiting to be convinced the pace of price increases will stabilize and inflation gains have been too narrowly focused on goods.

The Dow Jones Industrial Average fell 64.84 points, or 0.19% , to 37,631.42. The S&P 500 dropped 12.62 points, or 0.25 %, to 4,771.38 and the Nasdaq Composite lost 31.90 points, or 0.21 %, at 14,938.63.

Microsoft briefly overtook Apple as the world’s most valuable company, after the iPhone maker’s shares dropped nearly 4% since the year began due to concerns over falling demand. Microsoft’s shares rose 0.5%, while Apple dipped 0.6%.

Nearly all of the S&P 500’s 11 major sectors declined, with only energy and technology in positive territory.

Crypto stocks such as Coinbase , Bitfarms and Riot Platforms reversed early gains and turned lower. The U.S. securities regulator approved the first U.S.-listed exchange-traded funds (ETF) to track spot bitcoin late on Wednesday.

Citigroup fell 2% after a filing showed the lender booked about $3.8 billion in combined charges and reserves that will erode its fourth-quarter earnings, due to be reported on Friday.

Other banks like JPMorgan Chase lost 0.7%, Bank of America fell 1.7% and Wells Fargo shed 1.6% ahead of their earnings reports on Friday.

Declining issues outnumbered advancers for a 1.9-to-1 ratio on the NYSE and a 2-to-1 ratio on the Nasdaq.

The S&P index recorded 33 new 52-week highs and one new low, while the Nasdaq recorded 84 new highs and 127 new lows.

(Reporting by Chuck Mikolajczak; Editing by Richard Chang)

By Jack Queen and Luc Cohen

NEW YORK (Reuters) -Donald Trump on Thursday complained to a New York judge that he “did nothing wrong” as a civil fraud trial that could hobble the former U.S. president’s business empire drew to a close.

Trump made a surprise statement from the defense table after his lawyers wrapped up their closing argument in the case.

“Your honor, look, I did nothing wrong. They should pay me,” Trump said.

Justice Arthur Engoron, who earlier had faced a security threat at his suburban home, did not appear to be impressed with Trump’s argument.

“Please control your client,” the judge told Trump’s lawyer, Christopher Kise.

On the trial’s final day, Engoron reacted skeptically to Kise’s argument that Trump should not be penalized for allegedly manipulating the value of his properties because lenders and insurers that did business with him still turned a profit.

“There does not have to be any evidence of harm,” Engoron said.

Engoron also said he did not find a defense witness to be credible.

In the trial, the judge is considering what penalties to impose after earlier ruling that Trump and his company fraudulently manipulated property values.

New York Attorney General Letitia James, who brought the case, is seeking nearly $370 million and a lifetime ban on Trump from the state’s real-estate industry.

Trump is the frontrunner for the Republican nomination to challenge Democratic President Joe Biden in the November election.

Shortly before Trump’s legal team concluded its arguments, Alina Habba, another of his lawyers, pointed out that James pledged to scrutinize Trump’s business practices while she was campaigning for office as a Democrat. Engoron said that was not relevant to the case.

The trial’s closing arguments took place in an atmosphere of heightened security after media outlets reported a bomb threat at Engoron’s suburban home. The judge has been a frequent target of Trump’s criticism.

SECURITY ISSUES

Security has been an issue throughout the months-long trial. Engoron’s top staffer faced threats after Trump criticized her as politically biased, prompting the judge to issue a gag order barring him from disparaging court staff. Trump has been fined $15,000 for twice violating the order.

As James arrived at the courthouse, onlookers cheered and chanted, “Thank you, James.” Police stood guard and tightly controlled entrances to the building.

Trump, who has denied wrongdoing and criticized the trial as a “witch hunt,” renewed his attacks on James during a break on Thursday.

“She sued me because she wanted the publicity,” Trump said.

Trump has complained that the trial is interfering with his presidential campaign but has used occasional court appearances to argue that he is the victim of political persecution.

Engoron will issue a verdict at a later date without a jury. He found Trump liable for fraud in September, leaving the trial to focus largely on how much money Trump should surrender as ill-gotten gains.

Trump has appealed Engoron’s prior order and is almost certain to appeal any verdict against him, which could delay a final judgment for many months to a year or more.

Throughout trial, the state’s lawyers sought to show that Trump consistently overvalued many of the towers, golf clubs and other assets that burnished his reputation as a business mogul before he entered politics.

Trump admitted to providing inaccurate property valuations during defiant and meandering testimony in November.

Kise argued on Thursday that any alleged manipulation was harmless. Kise said banks and insurers would have been eager to do business with Trump even if his net worth was far lower, Kise said.

“He’s a whale client,” Kise said.

The trial earlier featured a tense face-to-face reunion between Trump and his onetime lawyer and fixer Michael Cohen, who testified that Trump directed him to manipulate asset values. Kise on Thursday called Cohen a “serial liar.”

A lawyer for Trump’s adult children Donald Jr. and Eric, who are also defendants in the case, told the judge there was no evidence that they were significantly involved in the financial statements.

“This is a press release wrapped up in a lawsuit,” lawyer Clifford Robert said of the case brought by the attorney general.

Republican voters in Iowa and New Hampshire will be the first to decide their preferred nominee this month to face Biden. Trump’s legal troubles have not diminished his commanding lead over party rivals.

Trump also has pleaded not guilty in four criminal prosecutions, including two that charge him with unlawfully trying to overturn his 2020 election loss to Biden. All could go to trial before this year’s election.

(Reporting by Jack Queen; additional reporting by Brendan O’Brien and Susan Heavey; Writing by Andy Sullivan; Editing by Noeleen Walder, Will Dunham and Daniel Wallis and Chizu Nomiyama)

By Jack Queen and Luc Cohen

NEW YORK (Reuters) -A New York judge overseeing a civil fraud trial that could hobble Donald Trump’s business empire reacted skeptically on Thursday to his lawyer’s closing argument that the former U.S. president did nothing wrong because the financial activity at the heart of the case was essentially harmless.

As Trump looked on from the defense table, Justice Arthur Engoron challenged lawyer Christoper Kise’s argument that Trump should not be penalized for allegedly manipulating the value of his properties because lenders and insurers that did business with him still turned a profit.

“There does not have to be any evidence of harm,” Engoron told him on the trial’s final day.

Engoron also said he did not find a defense witness to be credible.

Engoron earlier in the day faced a security threat at his suburban home. In the trial, the judge is considering what penalties to impose after earlier ruling that Trump and his company fraudulently manipulated property values.

New York Attorney General Letitia James, who brought the case, is seeking nearly $370 million and a lifetime ban on Trump from the state’s real-estate industry.

Trump is the frontrunner for the Republican nomination to challenge Democratic President Joe Biden in the November election.

Shortly before Trump’s legal team concluded its arguments, Alina Habba, another of his lawyers, pointed out that James pledged to scrutinize Trump’s business practices while she was campaigning for office as a Democrat. Engoron said that was not relevant to the case.

The trial’s closing arguments took place in an atmosphere of heightened security after media outlets reported a bomb threat at Engoron’s suburban home. The judge has been a frequent target of Trump’s criticism.

SECURITY ISSUES

Security has been an issue throughout the months-long trial. Engoron’s top staffer faced threats after Trump criticized her as politically biased, prompting the judge to issue a gag order barring him from disparaging court staff. Trump has been fined $15,000 for twice violating the order.

Most recently, Engoron on Wednesday denied Trump’s bid to deliver his own closing arguments after the former president would not accept ground rules barring him from making a “campaign speech.”

As James arrived at the courthouse, onlookers cheered and chanted, “Thank you, James.” Police stood guard and tightly controlled entrances to the building.

Trump, who has denied wrongdoing and criticized the trial as a “witch hunt,” renewed his attacks on James during a break on Thursday.

“She sued me because she wanted the publicity,” Trump said.

Trump has complained that the trial is interfering with his presidential campaign but has used occasional court appearances to argue that he is the victim of political persecution.

Engoron will issue a verdict at a later date without a jury. He found Trump liable for fraud in September, leaving the trial to focus largely on how much money Trump should surrender as ill-gotten gains.

Trump has appealed Engoron’s prior order and is almost certain to appeal any verdict against him, which could delay a final judgment for many months to a year or more.

Throughout trial, the state’s lawyers sought to show that Trump consistently overvalued many of the towers, golf clubs and other assets that burnished his reputation as a business mogul before he entered politics.

Trump admitted to providing inaccurate property valuations during defiant and meandering testimony in November.

Kise argued on Thursday that any alleged manipulation was harmless. Kise said banks and insurers would have been eager to do business with Trump even if his net worth was far lower, Kise said.

“He’s a whale client,” Kise said.

The trial earlier featured a tense face-to-face reunion between Trump and his onetime lawyer and fixer Michael Cohen, who testified that Trump directed him to manipulate asset values. Kise on Thursday called Cohen a “serial liar.”

A lawyer for Trump’s adult children Donald Jr. and Eric, who are also defendants in the case, told the judge there was no evidence that they were significantly involved in the financial statements.

“This is a press release wrapped up in a lawsuit,” lawyer Clifford Robert said of the case brought by the attorney general.

Republican voters in Iowa and New Hampshire will be the first to decide their preferred nominee this month to face Biden. Trump’s legal troubles have not diminished his commanding lead over party rivals.

Trump also has pleaded not guilty in four criminal prosecutions, including two that charge him with unlawfully trying to overturn his 2020 election loss to Biden. All could go to trial before this year’s election.

(Reporting by Jack Queen; additional reporting by Brendan O’Brien and Susan Heavey; Writing by Andy Sullivan; Editing by Noeleen Walder, Will Dunham and Daniel Wallis and Chizu Nomiyama)

By Sri Hari N S

(Reuters) -Smith Douglas Homes notched a valuation of $1.21 billion in its market debut on Thursday, after the homebuilder’s shares jumped 11.9% on debut, marking a strong start to the year with investors warming up to new listings.

The company sold 7.69 million shares in its initial public offering (IPO), raising $161.49 million, priced at $21 apiece — the higher end of the previously estimated range.

Despite a turbulent economy and sky-high mortgage rates, Smith Douglas’ upbeat debut reflects investor confidence in the sector with housing demand still paddling strong.

The IPO market got a jolt of life in late 2023 with big names across sectors such as chip designer Arm Holdings, sandal maker Birkenstock and grocery delivery app Instacart listing their shares in the U.S.

No homebuilder has raised more $100 million in an IPO in the United States since 2021, according to data from Dealogic. The last to cross that was Dream Finders Homes, shares of which have since risen 153% above their offer price.

“The IPO proceeds should help Smith Douglas expand its presence in the Southeast region,” said Blake Brutocao, lead analyst at Renaissance Capital.

U.S. single-family homebuilding hit a 1-1/2-year high in November, positioning companies such as Smith Douglas for significant growth and investor interest.

Shares of homebuilding giants in the U.S. such as DR Horton, Lennar Corp and Pultegroup have surged more than 60% each last year.

“We could see more names from the real estate sector emerge as mortgage rates settle and additional buyers enter a market that has experienced low inventory,” Brutocao added.

Upon closing of the offering, founder fund, the Bradbury Family Trust will hold 88.2% voting power of the company.

Smith Douglas had previously disclosed that its home closing revenue dipped 4.3% for the quarter ended Sept. 30, 2023, while its profit fell 11.8%.

(Reporting by Sri Hari N S in Bengaluru; Editing by Shilpi Majumdar)

By Amina Niasse

NEW YORK (Reuters) – Mortgage rates edged higher for a second week, a survey released on Thursday showed, but they remain near the lowest levels since early last summer, which has contributed to a rebound in home loan demand in the new year.

The average 30-year fixed-rate mortgage rate ticked up slightly to 6.66% on Thursday from 6.62% the week prior, according to a report from Freddie Mac.

“Mortgage rates have not moved materially over the last three weeks and remain in the mid-six percent range, which has marginally increased homebuyer demand,” said Sam Khater, chief economist at Freddie Mac. “Even this slight uptick in demand, combined with inventory that remains tight, continues to cause prices to rise faster than incomes, meaning affordability remains a major headwind for buyers.”

Mortgage rates began softening during 2023’s fourth quarter on the back of a rallying bond market. After the Federal Reserve held its policy benchmark interest rate unchanged for three straight meetings, yields on mortgage-backed securities fell, and the average 30-year fixed-rate mortgage has eased from rates nearing 8% in October.

Rates on the most common type of home loan rose to two-decade highs last year following the Fed’s rate hike cycle, launched in 2022. High interest rates have limited affordability for prospective buyers and stoked an inventory shortage in the housing market as homeowners locked into cheaper rates were discouraged from selling.

(Reporting by Amina Niasse; Editing by Andrea Ricci)

By David Shepardson

WASHINGTON (Reuters) -The Federal Aviation Administration said Wednesday it is launching a formal investigation into the Boeing 737 MAX 9 after a cabin panel blew off an Alaska Airlines flight while in mid-air last week, forcing an emergency landing.

The FAA grounded 171 Boeing jets installed with the same panel after the landing, most of which are operated by U.S. carriers Alaska Airlines and United Airlines, pending safety inspections.

It is still unclear when the planes will be cleared to fly again, and the incident is the latest in a series of events that have shaken the industry’s confidence in the aircraft manufacturer.

The FAA said the Alaska Airlines MAX 9 incident “should have never happened and it cannot happen again.” It told Boeing of the investigation in a letter on Wednesday “to determine if Boeing failed to ensure completed products conformed to its approved design and were in a condition for safe operation in compliance with FAA regulations” and after learning of “additional discrepancies.”

Boeing did not immediately respond to a request for comment. Its shares were down 1.6% on Thursday.

Both Alaska and United said on Monday they had found loose parts on multiple grounded aircraft during preliminary checks, raising new concerns about how Boeing’s best-selling jet family is manufactured. The two carriers have canceled numerous flights with the planes grounded.

The carriers still need revised inspection and maintenance instructions from Boeing that must be approved by the FAA before they can begin flying the planes again.

Boeing on Tuesday told staff the findings were being treated as a “quality control issue” and checks were under way at Boeing and supplier Spirit AeroSystems, Reuters reported previously.

Boeing CEO Dave Calhoun told CNBC on Wednesday that a “quality escape” was at issue in the MAX 9 cabin blowout.

The Alaska Airlines flight had taken off from Portland, Oregon, on Friday and was flying at 16,000 feet (4,900 m) when the panel tore off the plane, which had been in service for only eight weeks. Pilots returned the full jet to Portland, with only minor injuries suffered by people on board.

Boeing’s manufacturing practices “need to comply with the high safety standards they’re legally accountable to meet,” the FAA added.

U.S. Transportation Secretary Pete Buttigieg declined to say on Wednesday when the FAA may allow the planes to resume flights but said it would only be when safe.

“The only consideration on the timeline is safety,” Buttigieg told reporters. “Until it is ready, it is not ready. Nobody can or should be rushed in that process.”

In 2019, global authorities subjected all MAX planes to a wider grounding that lasted 20 months after crashes in Ethiopia and Indonesia linked to poorly designed cockpit software killed a total of 346 people.

Boeing ended 2023 in second place behind rival Airbus in aircraft deliveries for the fifth year running, after seeing its roughly 50% share of the market eroded by the earlier crisis.

(Reporting by David Shepardson, Editing by Franklin Paul and Marguerita Choy)