Last Updated on 04/09/2024 by Arun jain
Sales go global
September is known as the worst month of the year for stocks, and so far it’s living up to that reputation — especially for Nvidia shareholders.
There are global stock markets Washed in red on WednesdayFears of an economic slowdown in the United States rattled investors ahead of Friday’s key jobs report.
Here’s the latest:
S&P 500 futures were down 0.3 percent in premarket trading.
Stocks in Asia and Europe were broadly sold off on Wednesday.
Oil prices also fell and bitcoin fell to a one-month low as concerns over global growth picked up.
It follows a bad day for US markets. The Nasdaq composite fell 3.3 percent on Tuesday, with Nvidia leading: The chip maker sank 9.5 percent, clearing $279 billion of its market cap — the biggest one-day decline ever for a US stock — and dragging down other artificial intelligence heavyweights that make up the so-called Magnificent Seven. (More on chip maker woes below.)
The S&P 500 had its worst day since the August 5 meltdown. Investors feel a bit of deja vu. Last month’s road That was prompted in part by data showing the US economy is losing steam. on tuesday, Poor production data He renewed those concerns.
Economists still believe a recession is unlikely, but the drip-drip of underwhelming growth data — especially in the labor market — has spooked some investors as the Fed weighs an eventual rate cut. Next: Investors will closely watch Wednesday’s JOLTS employment data and the Fed’s benchmark economic report.
The big focus is Friday’s payroll report. Economists expect so Employers added About 163,000 jobs in August. The soft number could force the Fed to “cut by 50 basis points,” Citi economist Andrew Hollenhorst said on a webcast with clients on Tuesday. “We may have a lot of volatility on Friday, as we interpret the jobs report, and then Fed officials interpret the jobs report,” he added.
The debate over the size of the Fed’s first cut has become a market obsession. And it has also become a political issue Donald Trump Warning the Fed to hold off on cutting borrowing costs until Election Day, and Progressive DemocratsIncluding Senator Elizabeth Warren of Massachusetts, urged the central bank not to delay.
On Wednesday, futures traders gave the odds of a 0.5 percentage point cut roughly one-in-three. That call could grow louder if Friday’s jobs data shows the hiring slowdown is worsening.
Here’s what’s happening
US steel mills threaten to close and relocate if proposed Nippon Steel deal collapses. US Steel CEO David Burritt told The Wall Street Journal that the company Will turn off old features And if the $14 billion sale dies down, maybe Pittsburgh will move out. Both presidential candidates have spoken out against the deal as they court blue-collar workers in the battleground state of Pennsylvania, saying the company should be American-owned and operated.
Intel is said to be in a standoff over federal chip subsidies. The chip maker is eligible for about $20 billion in loans and grants under the CHIPS Act to boost domestic production of its semiconductors, a key part of the Biden administration’s plan to make the industry more competitive. Also Negotiations have stalledBloomberg reports that the decline in sales has forced Intel to consider cutting jobs and spinning off its manufacturing unit.
Elon Musk’s Starlink will block X’s access to Brazil. In a U-turn, the satellite internet provider said He will obey With the country’s highest court ordering Musk’s social network to be blocked there amid controversy over misinformation on the platform. But Musk called Supreme Court Justice Alexandre de Moraes again on Wednesday. Impeachment.
Rating agencies settle their case with the SEC over their use of messaging apps. Moody’s, S&P Global and Fitch agreed to pay A combined $48 million in fines on charges of violating the agency’s record-keeping rules. The payments add to the billions Wall Street firms have had to pay for crimes involving their personal phones and use of apps like WhatsApp.
Bad day Nvidia
Shares in Nvidia were down again in premarket trading on Wednesday amid investor concerns that the boom in artificial intelligence stocks is slowing — and that the chipmaker at its heart could be the next target for an antitrust crackdown.
Shares of Nvidia tumbled on Tuesday. It was initially hit by widespread concerns about demand for AI chips, and then Bloomberg reported that the Justice Department Presented to the company. (Jenson Huang, founder and CEO of Nvidia, About $10 billion was lost In Tuesday’s paper Networth.)
It was a rough day for one of Wall Street’s highest flyers. Despite Tuesday’s stock drop, Nvidia’s stock is still more than double where it started the year. These huge gains helped power the S&P 500 and the tech-heavy Nasdaq as well.
But in recent months, investors have grown concerned that the frenzy has overheated, leading to occasional selloffs in Magnificent Seven shares. and short sellers, investors who bet on a decline in target companies’ stock prices. Set their sights on smaller AI players.
There were investors Already worried about NvidiaAfter the company delivered muted sales estimates last week.
Nvidia’s dominance in AI is hard to overstate. Its chips are in high demand for developers and providers of chatbots and other tools. While companies like Amazon, Alphabet and Microsoft are developing their own processors to reduce their reliance on the company, Nvidia’s sales continue to grow.
It is also building close relationships with other leaders in AI, including through a Partnership with Meta And A Potential investment in OpenAI.
The reported subpoena will increase government scrutiny of Nvidia. Department of Justice Claimed primary responsibility in June to examine the company’s role in the AI industry. Prosecutors are investigating several parts of his business, including:
software that locks customers into using its chips;
how the company distributes its products, including whether it gives preference to customers who purchase complete systems;
And, according to Bloomberg, Nvidia’s takeover of Run.ai, whose software AI manages computing applications.
The company has denied any wrongdoing. “Nvidia wins on merit, which is reflected in our benchmark results and value for customers, who can choose whichever solution is best for them,” he told Bloomberg in a statement.
China is haphazard
The bad news just keeps coming for China. Economic data released on Wednesday showed that services activity slowed last month, leaving Wall Street and beyond the country short of its 5 percent annual growth target.
A cascade of bad data forces a reevaluation. This Caixin/S&P Global Services Purchasing Managers’ Index A release on Wednesday showed activity slowed in August. It came days after the official data was revealed Manufacturing activity had contracted For the fourth month in a row.
Confidence in growth targets is eroding. There are global investment banks A decline in their growth forecasts. Bank of America is the latest to do so, saying in a note on Wednesday that it cut its expectations to 4.8 percent.
Western brands are feeling the squeeze. Multinational companies have shed light Weak demand in China In earnings calls, says the post-pandemic recovery has not materialized. Volkswagen warned this week that it may have to close factories in Germany for the first time in its history after missing financial targets, as it faces increasing competition and declining market share in China, its biggest market.
Volkswagen and others are not planning to exit China yet. The carmaker announced plans to invest €2.5 billion, about $2.7 billion, in April despite rising trade tensions between the West and Beijing.
Germany carves its way on China. German direct investment in the country has increased This year, the US and other allies are rethinking trade relations. It has put Europe’s largest economy at odds with the European Union. It sees China as a strategic threat (and China policy looms large in the US presidential election), Noah Barkinthe visiting senior fellow at the German Marshall Fund wrote in a note on Wednesday.
But whoever wins in November, watch this space to see how Washington will treat Europe and its companies regarding their relationship with China.
What’s Behind the Disney-Dish Fight
Days before “Monday Night Football” begins on ESPN, DirecTV still doesn’t have a deal to show the game to its roughly 11 million U.S. subscribers. Reason: Broadcaster is Caught in a contract dispute with Disney.
The fight underscores the troubles plaguing the media industry — and a deep uncertainty about how to fix it.
DirecTV wants to change the distribution game. Satellite TV Provider Pays Disney $2 billion per year For channels including ESPN. But like other TV providers, it has grown weary of paying high so-called carriage fees that essentially subsidize content for streaming services like Disney+.
DirecTV also wants to stop carrying bundles of channels it says customers don’t want. He argues that Disney should Offers flexible content packages Such as the slim bundles of premium sports content that ESPN proposed for Venu Sports joint venture with Fox and Warner Bros. Discovery. (Venu has has since been blocked By opening a business based on antitrust.)
“This is really about changing the model in a way that gives everyone confidence that this industry can survive,” said Ray Carpenter, DirecTV’s CFO. said on Tuesday.
Disney says DirecTV is unfair. ESPN’s chairman, Jimmy Pitaro, told CNBC on Tuesday that he had made an offer to DirecTV. A bundle of channels Similar to what he offers to Venu, as well as a few others. He said DirecTV “is not ready to negotiate or discuss those packages at this time.”
Pitaro added that the distributor’s stance is being driven by a focus on the “short-term value” of its private equity backer. (TPG A minority stake (in DirecTV, although the company is majority owned by AT&T.)
Basically, Disney argues that DirecTV isn’t willing to pay enough.
Disney has been here before. A year ago, media giant A Same obstacle with charterThe spectrum that cable TV providers own. Disney eventually agreed to give Charter customers discounted rates for its streaming services and drop some channels. (Disney won Higher fees for some of its channelsincluding ABC and FX.)
But will that kind of compromise work here? More importantly, will it solve the underlying problem of cord-cutting? “The evidence is yet to bear this out,” analysts at Moffett Nathanson wrote on Tuesday. “And we doubt that will ever happen.”
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