U.S. stocks recovered slightly on Friday but ended up down for the week as anxiety over the Federal Reserve turning more hawkish impacted investor sentiment. The tech-heavy Nasdaq Composite finished +0.1% on Friday, as Apple (AAPL) tried to rebound after sliding more than 6% over the past two days amid headlines concerning China’s ban of iPhone use in government agencies. At the same time, the benchmark S&P 500 concluded Friday’s session up +0.1%, while the blue-chip Dow ended 0.2% higher. For the week, the Dow was -0.8% and finished trading at 34,577, the S&P 500 was -1.3% and finished trading at 4,457 and the Nasdaq Composite was -1.9% and finished trading at 13,761. With the latest jump in oil prices in the past few days driven by longer-than-expected production cuts by key oil nations Saudi Arabia and Russia, along with confounding labor market data in the form of initial jobless claims falling for a fourth straight week, all eyes are now on next Wednesday’s consumer price index report for further clarity on the Fed’s future monetary policy actions. Read Seeking Alpha’s Catalyst Watch for a preview of next week’s major events.
How will higher oil prices factor into the economy and can they be sustained? Those are some of the questions traders are asking as they look to position their portfolios for the rest of 2023 and beyond. Remaining below $80 per barrel for most of the year, WTI crude futures (CL1:COM) broke above that level in the summer, and jumped to as high as $88/bbl on Tuesday (Brent traded above $90) after Saudi Arabia and Russia surprised markets by extending their production cuts through the end of the year. Separately, Enbridge (ENB) fell 7% AH on Tuesday after announcing deals to buy three natural gas utilities from Dominion Energy (D). Moody’s said the transactions would add pressure to Enbridge’s already weak financial profile. (11 comments)
Airbnb (ABNB) hosts in New York have been scrambling as a new regulation went into effect on Tuesday, effectively banning short-term rentals. The city argued that short-term rentals take away much-needed affordable housing stock, and hotels are surely no big fans. This may not have a material adverse effect on Airbnb’s results, but many hosts fear that the stringent rules could set a precedent that destroys the benefits of its sharing economy. Note that analysts widely expect Airbnb’s revenue growth to slow further, but Investing Group Leader JR Research said the stock’s pending addition to the S&P 500 has strengthened the market’s confidence in its growth story. (169 comments)
British chip design firm Arm Holdings (ARM) updated its IPO filing, saying it expects to price 95.5M shares between $47 and $51 apiece. That would value the company at as much as $54B, which is lower than the $64B valuation at which SoftBank (OTCPK:SFTBY) had previously bought a 25% stake it didn’t already own in Arm. The chip designer also confirmed that several major tech companies – including Apple (AAPL), Google (GOOG, GOOGL) and Nvidia (NVDA) – will become investors in the offering. While the hype surrounding Arm has been growing, Wall Street analysts have warned that this may not be warranted. Investing Group Leader Jonathan Weber also raised concerns over Arm’s high valuation, even if its underlying business growth is attractive. (34 comments)
Google (GOOG, GOOGL) introduced a new policy that will mandate political advertisers to “prominently” disclose when their ads contain AI-generated material, in an effort to increase transparency and curb the spread of inauthentic content. The mandate will go into effect in mid-November, a year ahead of the U.S. presidential and congressional elections. The move comes a week before top tech executives are scheduled to meet Senate Majority Leader Chuck Schumer in Washington to discuss AI regulation, including Alphabet CEO Sundar Pichai and Meta (META) CEO Mark Zuckerberg. On the other side of the pond, Europe has already called on online platforms to label AI-generated content, which is also a step backed by the majority of WSB subscribers. (8 comments)
Apple (AAPL) became the latest pawn in the U.S.-China cold economic war, amid mounting fears that its Chinese business will be hit by a ban on iPhone use by government workers and homegrown competition. Apple lost nearly $200B in market cap over two days after Beijing announced the ban – a move seen as retaliatory as the U.S. government had banned the use of certain Chinese products by government agencies, including TikTok and Huawei. The ban also comes days ahead of the iPhone 15 launch. However, Wedbush thinks the issue is way overblown, given the relatively small impact on the tech behemoth’s sales. Another cause for concern is Huawei’s new flagship smartphone, which Bank of America believes could help the Chinese firm regain market share and potentially pose downside risk to iPhone sales in the region – a view echoed by SA analyst Bill Maurer. (227 comments)
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