By Tomi Kilgore
Shares of Dow Inc. surged Thursday, after the industrial materials and chemicals company reported better-than-expected fourth-quarter results, and Chief Executive Jim Fitterling indicated investors should actually welcome inflation and interest rate increases.
Dow’s stock /zigman2/quotes/203121064/composite DOW +1.75% ran up as much as 7.1% intraday before paring gains to close up $2.96, or 5.2%, at $60.18. The price gain added about 20 points to the price of the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.12% , which fell 7 points on the day.
Earlier Thursday, the company reported fourth-quarter profit and sales that rose above Wall Street expectations. And while the company faced increased inflationary pressures on materials and labor, sales growth of 34.2% outpaced the 28.9% rise in cost of sales.
The recent historic spike in inflation has put the Federal Reserve on a path to raise interest rates as early as March, in an effort to temper demand-pull price increases. The threat of rising rates has caused a selloff in the broader stock market this year, as the S&P 500 index /zigman2/quotes/210599714/realtime SPX -0.16% has shed 9.2% year to date.
Meanwhile, Dow’s stock has rallied 6.1% this year. No wonder CEO Fitterling isn’t worried about what the Fed will do:
He added that he believes “commodities pull” is currently very strong, whether its in petrochemicals or minerals, for all the things that are needed for electric vehicles and alternative energy.
Looking ahead, Fitterling said that while order backlogs have been elevated as a result of logistics constraints, he expects “pent-up customer demand” to fulfill the backlogs as supply-chain pressures ease throughout the year.