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https://www.barrons.com/articles/stock-market-movers-457cee3b
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Klaviyo Inc. is reportedly raising the target of its upcoming initial public offering to more than $550 million.
Bloomberg News reported late Sunday that Klaviyo has decided to raise the target range for its shares to $27 to $29, up from its previously stated range of $25 to $27 a share. At the top of that new range, the IPO would raise $557 million, with the company valued at about $8.7 billion, according to Bloomberg.
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The U.S. stock market, as measured by the S&P 500 Index SPX, is trapped in a trading range, and volatility seems to be damping down considerably. The significant edges of the trading range are support at 4330 and resistance at 4540. Both of those levels were touched in the latter half of August. A breakout from this range should give the market some strong directional momentum.
Since Labor Day, prices have hunkered down into an even narrower range. Typically, the latter half of September through the early part of October…
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The second week of September, as in the NFL, marks a kickoff of sorts for the tech year.
Headlined by Apple Inc.’s
AAPL,
seminal iPhone event on the second Tuesday of the month at Apple Park, and anchored by Salesforce Inc.’s
CRM,
wildly popular Dreamforce conference up the road in San Francisco, these several days set a tempo as well as establish a road map for the industry over the next 12 months. They also open the floodgates on tech conference season, with shows stacked up over the next several weeks for Facebook parent Meta Platforms Inc.
META,
Microsoft Corp.
MSFT,
and Oracle Corp.
ORCL,
Oh, and there’s that initial public offering from Arm Holdings Plc, the chip designer owned by SoftBank Group Corp.
9984,
that is expected to value Arm at $50 billion to $54.5 billion on a fully diluted basis. Another IPO candidate, delivery startup Instacart, also plans a public offering that would value it at $7.5 billion. Both deals could jump-start what has been a somnolent tech IPO market the past few years.
For that reason alone, this jam-packed tech week might hold even more import, and consequences, than previous years. A confluence of legal tussles, macroeconomic conditions, a trade war with China, and regulatory bluster have raised the stakes.
“It’s a tale of two cities with this week’s events highlighting both the issues and opportunities in tech,” Silicon Valley analyst Maribel Lopez said in an interview, assessing the week. “Arm’s IPO showcases the strength of tech and AI at a time when the AI forum and Google-DoJ shine a light on the concern that a few companies are wielding tremendous power for the future of the world.”
Consider: Hours before Apple is expected to unveil a new crop of iPhones more noteworthy for pricing than features, Alphabet Inc.’s
GOOGL,
GOOG,
Google faces off with the Justice Department in a federal court in Washington, D.C.
Justice Department officials argue that Google illegally leveraged agreements with phone makers such as Apple and Samsung Electronics Co.
005930,
and with internet browsers like Mozilla to be the default search engine for their customers, thus preventing smaller rivals from gaining access to that business.
“This is a backwards-looking case at a time of unprecedented innovation, including breakthroughs in AI, new apps and new services, all of which are creating more competition and more options for people than ever before,” Google General Counsel Kent Walker said in a statement.
The following day, Wednesday, Senate Majority Leader Chuck Schumer, D-N.Y., convenes an all-star panel of CEOs from Meta, Microsoft, Google, OpenAI and Palantir Technologies Inc.
PLTR,
As lawmakers ruminate on how to harness AI responsibly, bipartisan legislation is in the works. Sens. Richard Blumenthal, D-Conn., and Josh Hawley, R-Mo., are among those crafting a bill.
Even Apple and Salesforce aren’t immune from recent events: Apple has endured a relatively rough patch of disappointing (for them) revenue and iPhone sales while balancing risk/reward with its huge investment in China, and Salesforce CEO Marc Benioff has threatened to relocate Dreamforce to Las Vegas after more than two decades in his hometown of San Francisco if drug use and homelessness disrupt this year’s event.
The most pressing concern, when all is said and done, is AI — which hovers like the Death Star over the tech landscape.
“The biggest concern is the forum is behind closed doors, which could lead to regulatory capture, where dominant players in the industry help influence the regulations being imposed,” Kimberlee Josephson, associate professor of business administration at Lebanon Valley College (Pa.), said in an interview. “It’s almost as if it puts them in the hot while giving them a seat at the table at the same time.”
“At the very least, it sends the signal that something is being done,” she said. “Antitrust cases are so subjective. What constitutes barriers to entry? DoJ adds a level of seriousness.”
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Investors in index funds have been well rewarded by a high concentration in the largest technology companies over the past decade. But there are also continuing warnings about the risk of such heavy concentrations, even in index funds that track the S&P 500. Solutions are offered to limit this risk, but if you expect Big Tech to continue to drive the broad market returns over the coming years, why not make an even more focused bet?
Comparisons of three index-fund approaches highlight how successful concentration in the “Magnificent Seven” has been.
The Magnificent Seven are Apple Inc.
AAPL,
Microsoft Corp.
MSFT,
Nvidia Corp.
NVDA,
Amazon.com Inc.
AMZN,
Alphabet Inc.
GOOGL,
GOOG,
Tesla Inc.
TSLA,
and Meta Platforms Inc.
META,
We have listed them in the order of their concentration within the Invesco S&P 500 ETF Trust
SPY,
which tracks the S&P 500
SPX.
The U.S. benchmark index is weighted by market capitalization, as is the Nasdaq Composite Index
COMP
and the Russell indexes.
SPY is 27.6% concentrated in the Magnificent Seven. One way to play the same group of 500 stocks but eliminate concentration risk is to take an equal-weighted approach to the index, which has worked well for certain long periods. But here, we’re focusing on how well the concentrated strategy has worked.
Let’s take a look at the group’s concentration in three popular index approaches, then look at long-term performance and consider what happened in 2022 as rising interest rates helped crush the tech sector.
Here are the portfolio weightings for the Magnificent Seven in SPY, along with those of the Invesco QQQ Trust
QQQ,
which tracks the Nasdaq-100 Index
NDX
and the Invesco S&P 500 Top 50 ETF
XLG
:
| Company | Ticker | % of SPY | % of QQQ | % of XLG |
| Apple Inc. |
AAPL, |
7.05% | 10.85% | 12.46% |
| Microsoft Cor. |
MSFT, |
6.65% | 9.53% | 11.76% |
| Amazon.com Inc. |
AMZN, |
3.30% | 5.50% | 5.84% |
| Nvidia Corp. |
NVDA, |
3.02% | 4.44% | 5.33% |
| Alphabet Inc. Class A |
GOOGL, |
2.17% | 3.12% | 3.83% |
| Alphabet Inc. Class C |
GOOG, |
1.88% | 3.11% | 3.32% |
| Tesla Inc. |
TSLA, |
1.79% | 3.10% | 3.17% |
| Meta Platforms Inc. Class A |
META, |
1.77% | 3.60% | 3.12% |
| Totals | 27.63% | 43.25% | 48.83% | |
| Sources: Invesco Ltd., State Street Corp. | ||||
The same group of seven companies (eight stocks with two common share classes for Alphabet) is at the top of each exchange-traded fund’s portfolio, although the top seven for QQQ aren’t in the same order as those for SPY and XLG. QQQ’s weighting was changed recently as the underlying Nasdaq-100 underwent a “special rebalancing” last month.
Here’s a five-year chart comparing the performance of the three approaches. All returns in this article include reinvested dividends.
QQQ has been the clear winner for five years, but it is also worth noting how well XLG has performed when compared with SPY. This “top 50” approach to the S&P 500 incorporates many stocks that aren’t listed on the Nasdaq and therefore cannot be included in QQQ, which itself is made up of the largest 100 nonfinancial companies in the full Nasdaq Composite Index
COMP,
Examples of stocks held by XLG that aren’t held by QQQ include such non-tech stalwarts as Berkshire Hathaway Inc.
BRK.B,
Johnson & Johnson
JNJ,
Procter & Gamble Co.
PG,
Home Depot Inc.
HD,
and Nike Inc.
NKE,
Now let’s go deeper into long-term performance. First, here are the total returns for various time periods:
| ETF | 3 Years | 5 Years | 10 Years | 15 Years | 20 Years |
|
SPDR S&P 500 ETF Trust SPY |
40% | 69% | 223% | 370% | 531% |
|
Invesco QQQ Trust QQQ |
41% | 113% | 430% | 882% | 1,158% |
|
Invesco S&P 500 Top 50 ETF XLG |
41% | 85% | 262% | 404% | N/A |
| Source: FactSet | |||||
Click on the tickers for more about each ETF, company or index.
There is no 20-year return for XLG because this ETF was established in 2005.
For five years and longer, QQQ has been the runaway leader, but for 5, 10 and 15 years, XLG has also beaten SPY handily, with broader industry exposure.
Something else to consider is that during 2022, when SPY was down 18.2%, XLG fell 24.3% and QQQ dropped 32.6%.
For disciplined long-term investors, the tech pain of 2022 may not seem to have been a small price to pay for outperformance. And it may have been easier to take the pounding when holding SPY or even XLG that year.
Here’s a look at the average annual returns for the three ETFs:
| ETF | 3 years | 5 years | 10 years | 15 years | 20 years |
|
SPDR S&P 500 ETF Trust SPY |
11.8% | 11.0% | 12.4% | 10.9% | 9.6% |
|
Invesco QQQ Trust QQQ |
12.0% | 16.3% | 18.2% | 16.4% | 13.5% |
|
Invesco S&P 500 Top 50 ETF XLG |
12.2% | 13.1% | 13.7% | 11.4% | N/A |
| Source: FactSet | |||||
So the question remains — do you believe that the largest technology companies will continue to lead the stock market for the next decade at least? If so, a more concentrated index approach may be for you, provided you can withstand the urge to sell into a declining market, such as the one we experienced last year.
Here is something else to keep in mind. In a note to clients on Monday, Doug Peta, the chief U.S. investment strategist at BCA, made a fascinating point: “The only novel development is that all the heaviest hitters now hail from Tech and Tech-adjacent sectors and are therefore more prone to move together than they were at the end of 2004, when the seven largest stocks came from six different sectors. “
Nothing lasts forever. Peta continued by suggesting that investors who are tired of big tech taking all the glory “need only wait.”
“[I]f history is any guide, their time at the top of the capitalization scale will be short,” he wrote.
Don’t miss: These four Dow stocks take top prizes for dividend growth
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Talking about AI alone has been pixie dust for big technology stocks this year. And as executives look for any way to shoehorn AI into their business plans, more S&P 500 index companies during their second quarter earnings calls mentioned “AI” than at any point since at least 2010, according to a report published on Friday.
What’s more, according to the report from FactSet, the companies talking about AI — even the ones that aren’t the big, obvious tech names — have seen their stocks fare better than shares of companies that haven’t.
For S&P 500 companies that mentioned “AI” on their second-quarter earnings calls, shares on average since June 30 dipped 0.8%, while rising 13.3% since Dec. 31, FactSet said. For companies that didn’t talk about AI on those calls, shares on average fell a bit more since the end of June — 2.3% — while inching only 1.5% higher since the end of last year.
“Even excluding the ‘Magnificent Seven’ (Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla), the S&P 500 companies that cited ‘AI’ still outperformed the S&P 500 companies that did not cite ‘AI’ on average during these periods,” FactSet Senior Earnings Analyst John Butters said in the report.
Meanwhile, Wall Street has long believed corporate America’s profits would rebound for the second half of 2023, after a year ruled by anxieties over inflation’s impact on the economy. Still, that collective bounce-back, as it has through this year, will hinge on strong results from the world’s biggest tech players.
Wall Street analysts expect S&P 500 companies to eke out a 0.5% gain in per-share profit growth during the third quarter, according to the FactSet report. If that number holds, it would be the first quarter of earnings growth since the third quarter of last year.
Those potential gains, however, will largely depend on results from Amazon.com Inc.
AMZN,
Meta Platforms Inc.
META,
and Alphabet Inc.
GOOG,
GOOGL,
— outsized companies with outsized influence on markets and S&P 500 company financials overall. Financials for those companies have rebounded this year, after big tech retrenched amid a drop-off in pandemic-related digital demand from people spending more time at home and online.
Three years of supply disruptions have upended the economy and driven prices higher, forcing the Federal Reserve to embark on a delicate effort to bring them lower by discouraging borrowing and spending through a series of interest-rate hikes. But what about the impact on bowling? For answers, we turn to results this week from bowling-alley chain Bowlero Corp.
BOWL,
which saw a jump in demand following the economy’s reopening but now faces questions about that demand as it shows signs of returning to Earth. Convenience-store chain Casey’s General Stores Inc.
CASY,
and homebuilder Lennar Corp.
LEN,
also report.
Adobe results: Digital-media, analytics and design firm Adobe Inc. reports quarterly results on Thursday. But Mizuho analyst Gregg Moskowitz said his focus was on the company’s broader digital transformation.
He cited stronger Web traffic, the potential for more deals with bigger customers, signs of improving trends in Adobe’s
ADBE,
analytics segment, as well as the segment that includes design tools like Photoshop. But he said the company’s moves in generative AI could be “a significant growth driver.” Adobe this year unveiled Firefly, an AI image and text-enhancement model that can be incorporated into Adobe’s software. Moskowitz said that “while very early, our checks indicate an already high level of large customer interest in GenAI projects, including Firefly for Enterprise.” However, he said the company’s $20 billion acquisition of online design platform Figma was still “a big question mark,” as costs and regulatory scrutiny accumulate.
Oracle results, supply situation: Cloud and IT-network developer Oracle Corp.
ORCL,
reports results on Monday. Like much of the tech world, Wall Street sees the company as an AI play. But UBS analysts said that as businesses race to secure the components that power AI, Oracle could have an “underappreciated edge” over rivals.
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WASHINGTON (AP) — Former House Speaker Nancy Pelosi said Friday she will run for reelection to another term in Congress as Democrats work to win back the majority in 2024.
Pelosi, 83, made the announcement before labor allies in the San Francisco area district she has represented for more than 35 years.
From the archives (November 2022): House Democratic caucus confers ‘speaker emerita’ title on Pelosi as Jeffries takes up party leadership reins
Also see (November 2022): Nancy Pelosi steps down as leader of House Democrats after two decades
“Now more than ever our City needs us to advance San Francisco values and further our recovery,” Pelosi said in a tweet. “Our country needs America to show the world that our flag is still there, with liberty and justice for ALL. That is why I am running for reelection — and respectfully ask for your vote.”
First elected to Congress in 1987, the Democratic leader made history becoming the first female speaker in 2007, and in 2019 she regained the speaker’s gavel.
Pelosi led the party through substantial legislative achievements, including passage of the Affordable Care Act, as well as turbulent times with two impeachments of former President Donald Trump.
The announcement quells any talk of retirement for the long-serving leader who, with the honorific title of speaker emeritus, remains an influential leader, pivotal party figure and vast fundraiser for Democrats.
Read on:
Nancy Pelosi: Love or hate her, her senior work ethic is admirable
Nancy Pelosi portrait unveiling at Capitol reduces John Boehner to tears
State of the Union guests include Bono, Paul Pelosi and Tyre Nichols’s parents
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“Super apps” have never truly existed in the United States, and it is apparent at this point that they never will.
That isn’t stopping some executives and investment analysts from still dreaming of becoming one-stop shops for their users’ needs, something only a small handful of apps in Asia have managed to do. The most prominent is Elon Musk, the Tesla Inc. TSLAchief executive who purchased Twitter last year and has proclaimed that he will turn it into an “everything app” called X that resembles super apps in China.
“I…
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Opinions expressed by Entrepreneur contributors are their own.
Have you recently considered why your advertising dollars aren’t working as well as they used to be? In today’s environment, it’s far more profitable to spend a large portion of your advertising budget going after the top 10-20% of income earners in your niche market vs. spending your entire budget advertising to all income earners in your market equally.
But why is this? Because the middle class has all but died out, with very few traditional middle-class households still existing in America today.
The top 20% of income earners are buying a good chunk of all the non-essential products and services out there today. According to the Washington Post, 38.4% of all discretionary goods and services were purchased by the top 20% in 2021. Furthermore, according to a CNBC report, more than 62% of the USA is living paycheck to paycheck in 2023.
As a result of this, the best thing for most advertisers to do is spend a larger portion of their company’s ad budget on the top 20% of upper-income individuals in their market as that is where a higher percentage of their customers actually lie.
By spending a higher percentage of their company’s advertising dollars on this portion of the market, companies will almost always be able to increase the ROI coming from their advertising budget as a result. Here’s how to target higher-income prospects in your market and start earning two to three times more money from your company’s online advertising budget as a result.
Related: How Targeted Marketing Can Improve Your Brand’s Efficiency
You want to start by seeing how much your average customer earns per year before you can make any definitive long-term adjustments to your ad accounts. Most companies will find that most of their sales occur to the top 10-20% of income earners in their markets. That said, you can still make extra money advertising to lower-income earners in those same markets as well.
Depending on your niche market, you will want to run some ads to lower-income earners, but should also generally pay less for that advertising (more on this in the next section).
If you have advertised with Google Ads before, the information you need to determine the income level of your customers is shown directly inside of the “audience menu” of your Google Ads account.
While Facebook Ads and other online advertising platforms don’t offer any stats on your average customer’s income, you can simply use your Google Ads data to filter down your ads on other platforms as well. Note: You could also run separate campaigns for each income level to find out which income levels purchase from your ads on Facebook.
Related: Get More of the Right Eyeballs Seeing Your Google Ads
If you are advertising through either Google or Facebook, you already have the ability to target users in the top 10%, 20% or 30% of income demographics inside your ad accounts right now with a few simple clicks.
While Google and Facebook do have these income-targeting options available through their ad platforms by default, neither company allows you to know the exact income of their users on an individual level. Google and Facebook are using publicly available census data, at a zip code level, to offer you a way to target users by “income.” As a result, high-income prospects not residing in high-income zip codes are not targetable using Google and Facebook’s income filtering systems.
If you want to target all verified high-income individuals in your market, not just those that live in high-income neighborhoods, you could instead purchase a list of known high-income email addresses in your geographic market, then upload this list to your Google and/or Facebook Ads accounts to filter users by income that way. This also works for platforms like TikTok and LinkedIn.
This ensures that only those high-income prospects on your list will see your ads when they search for your keywords on Google. Note: You can find a list of high-income individuals’ email addresses by going to any public third-party data broker.
For doing income targeting outside Google and Facebook, you only have two primary options to filter out low-income users on those platforms:
Related: The Step-By-Step Guide to Finding Your Niche and Target Market
If you are using the default income targeting options inside of Google Ads, Google will tell you that it doesn’t know the income of all of its users. About 30% of its users will always be listed as an “unknown” status so you must decide what you are going to do with these users, right from the start.
If you are starting with a limited budget, I recommend starting out your high-income-earners advertising campaign by only targeting users with a “known” income status as that is the easiest and most consistent way to get a high return from your ad budget upfront.
Sentinel, a high-end package delivery box company, found targeting “unknown” income users on Google’s Ad platform was unprofitable, presumably due to most users in this “unknown” income category being of a much lower average income level overall. After the company had spent over $200,000 to test Google Ads, literally zero sales had come from this “unknown” income category whereas dozens of sales had come from the “known” income user category on the platform (mostly the top 10% of income demographic group).
Once you have tested advertising to all the users with a known income status in your ad account, if you want to still try to squeeze a few extra dollars of profit out of the Google platform, you can try running ads targeted to these “unknown” income users to see what return you can get out of this additional demographic for your company as well.
By advertising to this unknown group of users, Google will tell you at exactly what rate these users convert and at what level it is profitable for your company to advertise to them moving forward.
For example, if you find Google’s “unknown” user category converts at half the rate as your other high-income users in your account, you can tell Google you want to pay 50% less for these “unknown” users moving forward to get some extra sales from your market, all while still meeting the target ROI target you have already set for your other campaigns.
You can do the same thing for testing out other income groups to squeeze extra profit out of these other income categories you may not have used in your market yet as well.
Related: 5 Tips for Reaching the Rich
If you’re still advertising to everyone in your market equally, regardless of their income level, then you are likely leaving behind at least half the total profit you could be making with your current ad budget. For many of the people I run across, it’s the only thing separating them from success and being able to create a scalable ads strategy for their company online.
At the very least, it won’t hurt to check into your customers’ median income before continuing down the same path your company is going down now. What you find may surprise you.
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Corey Zieman
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Entrepreneurs often initially believe that niching down is a mistake because their product or service helps “everyone.” So instead, they decide to cast a wide net in hopes of garnering more sales.
But for anyone who’s adopted this “forget the niche” mindset, beware. Because you may actually be undermining your business growth. In fact, understanding and embracing your specific niche could be exactly what your business needs.
Related: The Step-By-Step Guide to Finding Your Niche and Target Market
Stating your niche clearly online is critical for your business growth. A niche statement outlines what you do and who you do it for. It gives potential clients immediate insight into whether your services align with their needs. Clarity helps you attract more ideal clients, boost sales and increase the bottom line.
For example, say your business offers virtual assistant services for female entrepreneurs. This niche statement will instantly resonate with your target audience. A female entrepreneur will immediately understand that your service has her needs in mind. This crystal-clear clarity increases your chances of converting her into a client after she engages with your brand.
This all-to-common fear of being pigeonholed often leads entrepreneurs to resist defining their niche (for a while, or forever). They’re concerned that niching down will restrict their business, limiting the audience they can reach. This couldn’t be further from the truth.
While your niche describes what you do and who you do it for, your brand extends beyond these boundaries. It encapsulates your mission, values, personality and what sets you apart in your industry. It creates an immersive experience for your clients and includes all of your multi-passionate, multi-skilled aspects.
Therefore, your niche serves as a beacon, making it easier for ideal clients to find you amid a sea of online options.
Related: How Niching Down Gives You the Power to Dominate Your Market
In online marketing, many people argue that you are the niche. This confusion between being a niche and carving out a niche often holds entrepreneurs back from making significant sales. The more you communicate what you do and who you do it for, the more you become the top choice for your target audience (a.k.a. establishing your niche).
Many large corporations who are trying to do things differently put this strategy into action. Take Apple, for example. This tech giant carved out a specific niche for itself — premium consumer electronics for users who appreciate innovation, design and simplicity.
Apple’s niche doesn’t limit them. Rather, it has enabled them to command a significant market share. They’ve established a loyal customer base and dictated their own prices in a competitive industry. This approach has contributed to their ranking among the most valuable global brands.
Another notable trend is “micro-niche” businesses that are sprouting up in the digital space. They focus on serving a very specific subset of customers with unique needs.
For instance, a business specializing in vegan cookies targets a very specific customer base. Despite the narrow focus, these businesses have seen remarkable success. They offer specialized products or services that mass-market businesses cannot.
This conversation reminds me of a profound saying in marketing: “If you’re talking to everybody, you’re talking to nobody.” When you try to cater to everyone in the market, your message becomes diluted, vague and ineffective. Your voice gets lost in the noise.
A niche helps your voice be heard. It amplifies your message to reach the people who need to hear it the most. And let’s not forget another key advantage of niche marketing: less competition. When you focus on a specific niche, you reduce the number of direct competitors, enabling you to stand out.
Customers are willing to pay more for specialized services. They know that specialists have in-depth knowledge and skills to cater to their needs. This allows niche businesses to command higher prices than their generalist counterparts.
Understanding your niche also helps streamline your marketing efforts. You can tailor your message to resonate with your target audience, leading to higher engagement and conversion rates. Knowing who you’re speaking to allows you to customize your offer. Thus, you can add more value and build stronger relationships with your customers.
That said, don’t confuse your niche with a static concept. As markets evolve and customer preferences shift, your niche might need to adapt. This is part of your business growth; it is not a restriction. It shows your ability to understand and respond to market dynamics. You will stay relevant and continue to meet your customers’ needs.
Having a defined niche doesn’t prevent you from expanding in the future. As your business grows and establishes its authority within the niche, you can start to explore related areas and broaden your reach. This reflects a strategic and sustainable growth plan, compared to an attempt at conquering the entire market at once.
Related: How to Thrive in Niche Markets
Choosing to speak to everyone, instead of specific ideal clients, could be the misstep that’s costing your business valuable sales and potential growth.
So instead of viewing a niche as a limitation, treat it like a strategic tool carving out your unique space in the market. As you learn how to leverage it, you might just find that the world of niche marketing offers boundless opportunities for business growth and success.
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Holly MacCue
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Third-party cookies have been dying a slow death for years. Google delayed the destruction of the cookie into 2024, and yet, there’s no doubt that the demise of third-party data is coming. When that happens, it’s going to change everything.
While there will be necessary adjustments along the way, the removal of a cookie-driven marketing economy should be a major upgrade for marketers and customers. Here are a few ways that the absence of cookies will make digital advertising better.
Related: What Are Cookies and How Do They Affect Your Online Business?
Advertising with cookies is a data-driven affair. This often makes interactions cold and calculated. It can also make them misleading.
In 2022, Search Engine Land was already trumpeting the end of the third-party cookie as a net positive.
“Third-party cookies are predisposed to inflation and double-counting when it comes to conversions,” the publication explains, “And conversions, whether tied to an online purchase or a form submission, are what most businesses truly value.”
Rather than focus on the customer, third-party cookies focus on results — and often, those results are miscalculated and inflated by competing marketing tools. By removing the third-party cookie factor, companies can refocus on what matters most: their customers. A more customer-centric marketing model looks past the algorithms and calculations and attempts to infuse every business activity with a customer-first mindset.
A cookieless future is an opportunity for innovation and creativity. Native advertising platform Nativo utilizes a solution that leans into a new version of contextual targeting that prioritizes customer personalization. This solution uses AI to analyze and predict customer behavior, rather than third-party cookies. If companies rely more on AI for predictive analytics, they can protect the privacy of their customers while still collecting helpful data that can help them convert.
The lesson? Refocusing on the current customer experience rather than third-party data is a good thing.
In the past, companies have been able to lean on the customer information gleaned by third parties to target their advertisements. This is effective to a degree, but it has also created a relationship gap between companies and their clientele.
Now, brands will need to take a more thoughtful and personalized approach to their data collection and use. Remember, the end of the third-party cookie isn’t technically the end of the cookie concept.
Companies can still collect first-party cookies. Treasure Data refers to these as “data you collect directly from interactions with your customers and audiences on your own channels.” The customer data management platform adds that this can include demographics, website activity, email engagement, purchase history and even customer feedback, interests and other behaviors.
While brands will still be able to collect first-party data, they won’t be able to use it in traditional third-party data methods. Instead, they’ll need to invest in purposeful data management. This will require specific marketing end-goals to make it worthwhile, such as asking for feedback to improve a product or plan a future marketing campaign.
Brands will also need to stay up to date with the latest consumer data privacy laws. As of mid-2023, nine U.S. states had comprehensive data privacy laws in place, and many others had bills in the works. This combination of purpose and security will create much more intentional data use in the future — and that’s absolutely an upgrade from the current third-party cookie marketing environment.
The removal of third-party cookies will allow brands to refocus on customers, but the impact will go past better awareness and revenue growth. It will also restore a sense of relationship. This, combined with first-party data, will make it easier to personalize and deepen customer connections.
Writing in January 2020, Michael Schoen, the GM and VP of Marketing Solutions at Neustar, said, “A cookieless world is beneficial because it leads to an identity-centric approach, which we have seen to be a more effective approach to marketing.” The executive added, “When you stop focusing on the cookie and instead focus on the consumer’s overall journey, you have more insight and control when it comes to your impact on both.”
The departure from cookies will allow companies to refocus on their customers, not just in specific interactions, but over the long term. They will see them as individuals with thoughts, proclivities and needs rather than reducing them to condensed data points.
Related: How Marketers Can Prepare for the Removal of Third-Party Cookies
From better customer experience to deeper client relationships to safer, more intentional data usage, the death of third-party cookies is likely to have a positive ripple effect that will elevate 21st-century marketing as we know it. The only thing now is to wait until Google starts phasing third-party cookies out next year — then the marketing fun can begin in earnest.
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Kimberly Zhang
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Is the Stock Market Open Today? These Are the Trading Hours for Labor Day.
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Ever since my daughters entered high school, I was preparing myself for the dreaded “empty nest.” While it was years away, I worried about how I would adjust to the reality of kids in college and no more time-sucking chores to do.
Even though I have been a working mother in a two-income household, family always was a priority, and I was devoted to caring for our daughters. So, I did wonder how I would adjust to the hole left in my daily calendar when our girls went off to school, graduated or moved on and launched their own lives.
But here’s the dirty little secret that no one talks about until it happens. After decades of marriage and three years of COVID quarantine, I’ve got a different problem: I can’t get my husband to leave the house.
It’s a topic of conversation among my girlfriends, all of us looking for some solitude but instead faced with our husbands, always in their sweatpants, happily hanging out around the house.
Of course, COVID was the trial run, the big disrupter, for being at home. My husband, pre-COVID, was a human tourism brochure, constantly digging up great activities we could go to. Most of them were things we did together but since we weren’t holed up together at home, it didn’t feel stifling.
But once COVID hit, all those activities came to a screeching halt and my husband proclaimed that with all the books, CDs and vinyl from his youth along with tchotchkes he’s collected over decades, he could be more than happy to stay home forever and read, listen to music and peruse his collections.
Maybe I have done such a good job of creating a comfortable nest that my husband just doesn’t feel the need to leave. Perhaps COVID caused him to re-evaluate just how important it was to get some fresh — and possibly contaminated — air.
Maybe, like so many men his age, he doesn’t have enough friends — Jane Fonda has expounded on that of late, explaining to anyone who will listen how vital her women friends are to her well-being, while all men want to do is sit next to each other and watch sports or cars or women from afar. And she’s right, women have friends that are soul mates, advisers, co-conspirators. Most men haven’t thrown each other that emotional lifeline.
The timing is unfortunate. I’m working less than full time at this stage of life. Now that I’ve gotten accustomed to my children being gone and look forward to some time to myself, my husband has had to rethink his motivation to get out of the house every day.
The fact that he continues to work, but now fully from home, hasn’t helped. After stressful workdays I understand that he also needs some downtime.
Many men are at the stage of life where a decision about whether to retire is also on the table. But here is a word of warning to husbands considering that as their next chapter: Check your Rolodex for friends you want to spend time with because we can’t be your constant companions.
Maybe it’s a “Men Are from Mars, Women Are from Venus” kind of thing. But after watching all the episodes of “The Sopranos” for the first time recently, I feel that if only there was a Bada Bing club — without the Bada Bing. Maybe someone should start a Daddy Daycare to literally take care of Daddy.
Guys of a certain age need a place to meet and schmooze, a clubhouse where someone can make them a plate and just create an inviting space to shoot the breeze. I have no idea what they would talk about, though.
See: ‘It’s just a nice place for an old guy to go, I guess’: Men’s Sheds offer camaraderie and connection
Women know that building deep friendships has paid huge dividends as we all have gotten older. Long-married spouses need more time with their friends — a respite from too much togetherness at home and an opportunity to discuss something beyond what’s for dinner.
I did gently mention a few weeks ago to my husband that he rarely leaves the house these days and maybe he could take an outing one afternoon a week that didn’t include me.
“What do you mean I never leave the house?” he said, incredulous. “I went to Ralph’s just the other day.” And proud hunter-gatherer that he is, we’ve got the boxes and cans of unheard-of sale items we will probably never use to prove it.
Also see: Am I lonesome? ‘I’m fine. I’m fine.’ How single men can prepare to age alone.
I have found women are often more adventurous, even as we age. We are less willing to just hang back and “relax.” For an increasing number of women, gray divorce has become a term that sociologists are noticing, as more older women have chosen to approach their senior years alone.
See: Gray divorce can be financially devastating — especially for women
For others, independent travel is an answer. There are so many blogs, Instagram and Facebook
META,
accounts by women traveling alone that we are practically our own demographic. In my independent solo travels, I have encountered many women who got tired of asking their reluctant husbands to come along and have happily set out on their own.
Once you arrive in a strange city, it is totally liberating to explore when you don’t have to check in with anyone else about what to do when, how to get wherever, or what time or what to eat each day. And it’s easier to engage in conversations with strangers when you are by yourself. I find I’m more open to those encounters when I’m on my own.
I heard a story recently from a photographer who was photographing Dolly Parton. The soon-to-be-married photographer asked the performer her secret to her long marriage. Parton’s answer: “Travel a lot. Separately.”
While it’s important to get away, for me, who never described myself as a homebody, it’s essential to have some alone time that doesn’t involve leaving the house. As we age, the one thing that is certain is that the future is unpredictable.
There may come a time when leaving the house is not a safe or viable option. While we are healthy and active enough, let’s give each other the space to enjoy one of life’s guilty pleasures — moments of solitude at home where you have a chance to think, regroup, dream and sometimes to just do absolutely nothing.
The added bonus will be that the time we do spend together will be all the more interesting, with new adventures to hear about.
Iris Schneider has been a journalist and photographer since the 1970s, starting in New York City while teaching at PS 97 on the Lower East Side. She became a staff photographer at the Los Angeles Times in 1980. Her work can be seen on her website or on Instagram (@schneidereye).
This article is reprinted by permission from NextAvenue.org, ©2023 Twin Cities Public Television, Inc. All rights reserved.
More from Next Avenue:
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More than a year ago, the Federal Trade Commission sued Intuit Inc., the maker of TurboTax, for allegedly tricking people into thinking they could file their income taxes for free with the tax-preparation giant.
Now, an administrative judge inside the agency has ruled against Intuit — and the company said in a Friday afternoon SEC filing that it’s going to keep fighting the case, even if that means incurring “significant costs.”
“We expect to appeal this decision to the FTC Commissioners and, if necessary, then to a federal court of appeals. We intend to continue to defend our position on the merits of this case,” the company said in its 10-K filing.
“There is no monetary penalty, and Intuit expects no significant impact to its business,” Intuit spokesman Rick Heineman said in a statement. The company will appeal “this groundless and seemingly predetermined decision by the FTC to rule in its own favor,” he said.
Intuit already reached a $141 million settlement with state attorneys general about the allegations of deceptive advertising. The company says it has been clear and upfront with customers about costs. It did not admit liability in the settlement.
The FTC could not be immediately reached for comment Friday afternoon.
In March 2022, the regulator sued Intuit in federal court to immediately stop commercials that repeated “free” over and over. Intuit pulled some of the advertising and after filing season ended, a San Francisco federal judge said the FTC bid for emergency halts didn’t need to happen under the circumstances.
FTC lawyers also lodged an internal administrative complaint. “Intuit widely disseminated ads on television, on the radio, and online that gave consumers the impression that they could use TurboTax for free, even though two-thirds of taxpayers don’t qualify for Intuit’s free TurboTax offerings,” they wrote in administrative complaint proceedings.
The ongoing legal fight is happening while the broader fight over of free tax preparation is heating up. The Internal Revenue Service is planning to test its own pilot program in the upcoming filing season where taxpayers can file their taxes directly with the IRS instead of through tax preparation companies or individual preparers.
TurboTax and the tax software industry oppose the proposed IRS direct file system. So do Congressional Republicans.
One sticking point in the looming government shutdown is how much money the IRS should be getting in its budget. The House appropriations bill would forbid the IRS from using any money to build the direct file system.
Intuit Inc.
INTU,
shares closed 1.4% higher Friday, at $549.60, and the disclosure didn’t seem to be having much effect on the shares in after-hours trading. Shares are up 41% year to date, while the Dow Jones Industrial Average
DJIA
is up 5% and the S&P 500
SPX
is up 17.6%.
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The U.S. Labor Day holiday will mark another milestone in the marathon to bring workers back to the office, but it won’t be a quick fix for landlords, according to Thomas LaSalvia, head of commercial real estate economics at Moody’s Analytics.
Employers from Facebook parent Meta
META,
to Goldman Sachs
GS,
recently laid out mandates for staff to return to the office more frequently, starting this fall, including the big one — the federal government.
“A lot of companies are saying that after Labor Day, ‘We expect more out of you,” LaSalvia said, referring to days in the office. Still, office attendance, he argues, likely only stages a fuller comeback if a job or promotion is on the line.
Amazon.com Inc.’s
AMZN,
Chief Executive Andy Jassy has been trying to drive home the point by warning staff to return at least three days a week, or face the consequences.
That could prove difficult, with Friday’s U.S. jobs report for August expected to show U.S. unemployment at a scant 3.5%, near the lowest levels since the late 1960s, even if hiring has been slowing. The labor market, so far, appears unfazed by the Federal Reserve’s benchmark rate reaching a 22-year high.
It has been a different story for landlords facing a roughly 19% vacancy rate nationally and piles of debt coming due, especially for owners of older Class B and C office buildings with a bleak outlook or properties in cities with wobbling business centers.
See: San Francisco’s office market erases all gains since 2017 as prices sag nationally
As with shopping malls, LaSalvia said it’s largely a problem of oversupply, with many office properties at risk of becoming obsolete as tenants flock to better buildings and locations staging a rebirth. The trend can be traced in leasing data since 2021, with Class A properties in central business districts (blue line) showing a big advantage over less desirable buildings in the heart of cities (orange line).
Moody’s Analytics
“Little by little, we are finding the office isn’t dead,” LaSalvia said, but he also sees more promise in neighborhoods with a new purpose, those catering to hybrid work and communities that bring people together.
Another way to look at the trend is through rents. Manhattan’s Penn Station submarket, with its estimated $13 billion overhaul and neighboring Hudson Yards development, has seen asking rents jump 32% to $74.87 a square foot in the second quarter since the fourth quarter of 2019, according to Moody’s Analytics. That compares with a 2% bump in asking rents in downtown New York City to $61.39 a square foot for the same period.
The push for a return to the office also doesn’t mean a repeat of prepandemic ways. Goldman Sachs analysts estimate that part-time remote work in the U.S. has stabilized around 20%-25%, in a late August report, but that’s still up from 2.6% before the 2020 lockdowns.
Furthermore, the persistence of remote work will likely add another 171 million square feet of vacant U.S. office space through 2029, a period that also will see tenants’ long-term leases expire and many companies opting for less space. The additional vacancies would roughly translate to 57% of Los Angeles roughly 300 million square feet of office space sitting empty.
“The fundamental reason why we had offices in the first place have not completely disintegrated,” LaSalvia said. “But for some of those Class B and C offices, the writing was on the wall before the pandemic.”
U.S. stocks were mixed Thursday, but headed for losses in a tough August for stocks, with the S&P 500 index
SPX
off about 1.5% for the month, the Dow Jones Industrial Average
DJIA
2.1% lower and the Nasdaq Composite
COMP
down 2% in August, according to FactSet.
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Opinions expressed by Entrepreneur contributors are their own.
An estimated 80% of all internet users see Google Ads on a daily basis. That’s about 4.4 billion people. So, if you’re not getting any leads or seeing a return on your Google Ads campaigns, it’s not for a lack of reach — chances are, you’re doing something wrong.
There’s a reason Google Ads is the world’s number one pay-per-click (PPC) marketing service: It works! Don’t believe the naysayers. If a disgruntled marketer isn’t happy with Google Ads, it’s because they failed to diagnose the errors in their campaigns.
If you’re seeing sluggish ROI on your Google Ads campaigns, I’ve got some tips to share. After nearly two decades of using Google’s PPC ad services, I know a thing or two about how to get the most out of this all-important marketing service.
Related: How to Scale Your Business Using Google Ads
In my experience, Google Analytics is the best tool for self-diagnosing issues with Google Ads campaigns. Within their dashboard, you can see how each of your keywords and landing pages are performing. Use the Google Analytics dashboard to find the landing pages with the highest bounce rates and the keywords with the lowest click counts.
If you’re running multiple campaigns at once, this will give you a great opportunity to explore what works and what doesn’t by comparing the top-performing and the worst-performing campaigns.
There are a bunch of key performance indicators (KPIs) in the PPC game, but in my opinion, none more important from an ROI-maximization perspective than Impression Share. Your Impression Share figure will tell you how much room you have to scale.
If you’re capturing 80% or higher of the impression share for a keyword, you’re about to hit a ceiling. That remaining 20% is likely too expensive for you to target, and probably isn’t worth pursuing. You may need to change your keyword if this is the case.
However, an Impression Share score of, say, 5% or 10% indicates that there is a lot of room for growth. By gradually augmenting your monthly ad spend budget, you can probably tip the scales in your favor.
Sometimes the best solutions are the simplest ones. This is definitely the case with Google Ads, which offers a built-in “Recommendations” algorithm accessible on the left-hand panel of the Google Ads dashboard.
Google Ads Recommendations provides your campaigns with an “optimization score” that, in my experience, is almost always accurate. If yours is lower than 90%, I suggest implementing the recommended changes that Google Ads auto-generates below your listed score.
Related: Get More of the Right Eyeballs Seeing Your Google Ads
More often than not, a dud PPC campaign is caused by a keyword with low search traffic. Simply put, you’re not going to get any leads from a keyword that no one is searching for. That’s why I strongly recommend using any of the following services to identify which keywords are worth pursuing and which are not:
Ahrefs
Moz Keyword Explorer
SEMrush
In my opinion, any keyword with fewer than 500 searches per month is a waste of time and energy. Personally, I prefer going after keywords with multiple thousands of searches per month — as long as they don’t have keyword difficulty scores higher than 35 or 40. These software services are paid tools, to be sure, but they are worth every penny if you want to improve your PPC marketing performance. Otherwise, you are basically taking shots in the dark without the data required to make informed marketing decisions.
Google Ads has become a cottage industry unto itself. These days, there are many certified Google Ads specialists who can help you optimize your campaigns and eliminate some of the friction involved in the creation, analysis and maintenance of Google Ads campaigns.
Not only can Google Ads specialists pinpoint the vulnerabilities in your marketing strategy, but they can also take direct control over your campaigns so that they start converting on a more timely basis. Basically, they can take all of the legwork out of your PPC marketing.
Google has arguably the best geolocation targeting capabilities of any Big Tech giant — so use them! Within the Google Ads dashboard, you have three options when setting local targeting:
Presence or interest: People in, regularly in, OR showing interest in that location
Presence: People in or regularly in that location
Interest: People searching for that location
The default setting is “Presence or interest,” which is not always ideal. For instance, someone who may be passing through the city for a day and searching your keyword might not be interested in visiting your dental clinic.
If you aren’t seeing the ROI you want from your Google Ads campaign, I suggest tweaking these options. Specifically, I recommend narrowing your geolocating preferences to “Presence” in order to appeal to locals who are more likely to take an interest in your business.
Related: 18 Ways to Nudge Your Google Ad Higher Without Paying a Cent Extra
Contrary to popular belief, Google Ads is not a hands-off marketing tool. You can’t simply “set it and forget it” and ride off into the sunset while your bank account starts collecting zeros. It requires maintenance and testing almost every day if you want to succeed.
Despite the fact that it’s a bit heavy on maintenance, Google Ads is still the best game in town for PPC services nearly 20 years into its existence. However, it’s only as useful as your capacity to use it. By following the steps outlined above — including diagnoses, keyword optimization, KPI analysis and geolocation changes — you can improve your ROI on your Google Ads campaigns.
If that fails, don’t shy away from consulting with a Google Ads specialist. Fortunately for busy business owners, these professionals can take a lot of the heavy lifting out of your PPC marketing experience.
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Amine Rahal
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Beer giant Heineken N.V. is the latest Western company to exit Russia, announcing Friday the sale of its Russian operations to Arnest Group for one euro.
Under the terms of the deal, all of Heineken’s
HEIA,
remaining assets, including seven breweries in Russia, will transfer to the new owners, the beer giant said in a statement. The Russian Arnest Group has also taken over responsibility for Heineken’s 1,800 employees in Russia.
Heineken began the process of exiting Russia in March 2022, following that country’s invasion of Ukraine. The company said it expects to incur a total cumulative loss of €300 million ($324.1 million) as a result of its exit.
“We have now completed our exit from Russia. Recent developments demonstrate the significant challenges faced by large manufacturing companies in exiting Russia,” Heineken CEO Dolf van den Brink said in a statement. “While it took much longer than we had hoped, this transaction secures the livelihoods of our employees and allows us to exit the country in a responsible manner.”
A number of major Western corporations, including U.S. giants Apple Inc.
AAPL,
Alphabet Inc.
GOOGL,
GOOG,
Amazon.com Inc.
AMZN,
International Business Machines Corp.
IBM,
and McDonald’s Corp.
MCD,
have left Russia in response to Moscow’s February 2022 invasion of Ukraine.
Earlier this week, DP Eurasia, the master franchiser of the Domino’s Pizza Inc.
DPZ,
brand in Turkey, Russia, Azerbaijan and Georgia, also announced its exit from Russia.
But Heineken is “no hero,” according to Mark Dixon, the founder of the Moral Rating Agency, an organization set up after the invasion of Ukraine to examine whether companies were carrying out their promises of exiting Russia. “It failed to leave Russia for a year and a half,” he told MarketWatch via email. “The explanation that it took longer than expected doesn’t hold water, because of course it’s difficult to find a buyer if you remain so long a pariah state.”
The Ukraine Solidarity Project said that Heineken’s move should increase the pressure on companies that remain in Russia, such as consumer-goods giant Unilever PLC
ULVR,
“The point here is that major companies, like @Heineken, are and have taken loses of hundreds of millions and billions in leaving the Russian market. It is possible,” the Ukraine Solidarity Project tweeted Friday. “We’re sure @Unilever can do it, too.”
Related: WeWork, Carl’s Jr., Unilever and Shell among companies slammed by Yale over operations in Russia
The Ukraine Solidarity Project recently launched a high-profile campaign urging Unilever to get out of Russia, using images of Ukrainian veterans injured in the war with Russia. Last month, activists from the Ukraine Solidarity Project held up a giant poster featuring the veterans outside Unilever’s London headquarters.
The Moral Rating Agency has also reiterated its calls for Unilever to end its Russian operations.
“We have always said we would keep our position in Russia under close review,” a Unilever spokesperson told MarketWatch earlier this month. The spokesperson also directed MarketWatch to a statement on the war in Ukraine that the company released in February 2023.
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Wall Street looks ready to build on Monday’s gains, the first in five sessions for the S&P 500
SPX
and Nasdaq Composite
COMP.
That’s as expectations build around Nvidia, which has had a lackluster August, to knock it out of the park with earnings on Wednesday.
Investors have had months to focus on AI darlings such as Nvidia. In our call of the day, Goldman Sachs takes a look at stocks to trade after the big AI trade. A team led by strategists Ryan Hammond and David Kostin complied a basket of companies with the biggest potential long-term earnings per share boost from the impact of AI adoption on labor productivity.
Their analysis indicates that following widespread AI adoption, EPS for the median stock in that basket could be 72% higher than the baseline, versus 19% for the median Russell 1000 stock.
“We estimate the potential productivity-related EPS boost from increased revenues or increased margins, using a combination of company-level estimates of the share of the wage bill exposed to AI automation and the labor cost to revenue ratio,” said the Goldman team.
Since early 2023, when AI emerged as a theme for investors, they note their long-term basket of stocks has outperformed the equal-weight S&P 500 by just 6 percentage points, far less than near-term beneficiaries such as Nvidia
NVDA,
Microsoft
MSFT,
or Meta
META,
“The estimated AI-driven earnings boost is likely to occur over the next few years, but should be reflected in stock valuations sooner. However, the eventual share price impact will depend on the ability of companies to use AI to enhance earnings,” said Goldman.
While unable to pin it exactly, Goldman expects AI adoption will start to a have a “meaningful macro impact” between 2025 and 2030, with regulatory constraints and data privacy concerns likely to slow widespread adoption. Nearly 75% of CEOs see AI take-up impacting companies or cutting labor needs within the next five years, even if they don’t right now.
Firms with the biggest workforce exposure to AI and larger and more innovative ones, will likely adopt generative AI earlier than others, say the strategists. They say to “expect valuation multiples for these companies to increase first as the adoption timeline crystallizes, even if actual adoption and the associated EPS boost is occur later.”
Goldman’s estimates on the potential earnings boost for those long-term AI beneficiaries consist of several factors: the share of each company’s wage bill exposed to AI automation, how much of a company’s wage bill is exposed to AI automation and labor cost as a share of revenue.
“For the typical Russell 1000 stock, 33% of the wage bill is potentially exposed to AI automation and labor costs currently represent 14% of total sales. The potential boost from higher sales would increase earnings by 11% and reduced labor costs would increase earnings by 26%, all else equal,” say the strategists.
Here is a taster of their long-term AI beneficiaries basket:
And a few more:
Read: U.S. stocks may bounce this week, but summer selloff is only halfway done, analysts warn
U.S. stocks
SPX
COMP
are trading mixed. The yield on the 10-year Treasury
BX:TMUBMUSD10Y
is steady at 4.33%.
For more market updates plus actionable trade ideas for stocks, options and crypto, subscribe to MarketDiem by Investor’s Business Daily.
Microsoft
MSFT,
has proposed a Ubisoft license to win U.K. regulatory approval for its Activision Blizzard
ATVI,
buyout. Activision shares and Ubisoft
UBI,
surged in Paris.
On the heels of a 7% surge, EV-maker Tesla
TSLA,
is up 1.8%.
Opinion: SoftBank’s Arm is going public, but it faces a rapidly growing threat
Lowe’s shares
LOW,
are up after the DIY retailer’s earnings topped expectations, though it notes lower discretionary demand.
Among Monday’s late earnings news: Fabrinet
FN,
is up 18% after the high-tech manufacturing services company upbeat forecast, with new AI products helping drive results. Videoconferencing group Zoom Video Communications
ZM,
is up 4% after reporting an earnings jump and guidance.
Read: Why Amazon is this analyst’s top internet stock pick
The world’s biggest miner BHP
BHP,
reported a 58% slump in annual profit amid tumbling commodity prices in part due to China’s economic troubles. U.S.-listed shares are up 4%.
Arm Holdings filed its long-awaited IPO, which could be the year’s biggest. The chip designer aims to raise up to $10 billion with a valuation of $60 billion to $70 billion.
Existing home sales for July are due at 10 a.m., with several Fed speakers throughout the day: Richmond Fed President Tom Barkin at 7:30 a.m. and Chicago Fed President Austan Goolsbee and Fed. Gov. Michelle Bowman both at 2:30 p.m.
New video shows the day police raided 98-year old Kansas newspaper owner’s home.
Hitler’s birth house in Austria will be turned into a police station with a human rights training center.
These were the top tickers on MarketWatch as of 6 a.m.:
| Ticker | Security name |
|
TSLA, |
Tesla |
|
NVDA, |
Nvidia |
|
AMC, |
AMC Entertainment |
|
NIO, |
Nio |
|
APE, |
AMC Entertainment Holdings preferred shares |
|
TTOO, |
T2 Biosystems |
|
GME, |
GameStop |
|
AAPL, |
Apple |
|
MULN, |
Mullen Automotive |
|
AMZN, |
Amazon.com |
Is tech dancing to the beat of its own drum? The Chart Report flagged this one from Scott Brown, founder of Brown Technical Insights, showing performance of the Technology Select Sector SPDR ETF
XLK
:
“It’s only been a week, but consensus and conventional wisdom suggest higher yields are bad for Growth/Tech stocks. Meanwhile, Tech is acting like it never got the memo. It’s still too early to tell if Tech is trying to tell us something, but Scott points out that the sector is facing a crucial test this week at the March 2022 highs (around $163). $XLK is solidly above $163 after today’s bounce, but where it ends the week will likely hinge on $NVDA, as the company releases earnings on Wednesday evening,” says Patrick Dunuwila, editor and co-founder of The Chart Report.
“We are the champions.” Spain erupted in celebrations to welcome its Women’s World Cup victors. And England’s Lionesses got a 1,000 soccer-ball tribute.
No, Tropical Storm Hilary didn’t flood Dodger Stadium.
These thirsty beer-drinking thieves are raccoons.
Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern.
Listen to the Best New Ideas in Money podcast with MarketWatch financial columnist James Rogers and economist Stephanie Kelton.
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Arm Holdings Ltd. filed its long-awaited initial public offering late Monday, following last year’s failed bid by Nvidia Corp. to acquire the U.K.-based chip architecture company.
Arm has reportedly been seeking to raise $8 billion to $10 billion at a valuation of $60 billion to $70 billion, making its IPO the biggest of the year so far, and a number of large tech companies, including Amazon.com Inc.
AMZN,
Intel Corp.
INTC,
and Nvidia
NVDA,
are reportedly in the mix to be anchor investors.
In a late Monday filing with the Securities and Exchange Commission, Arm said it was offering to list its U.S. traded shares on the Nasdaq under the ticker symbol “ARM.”
Arm, which is owned by Japan’s SoftBank Group Corp.
9984,
was the target of an unsuccessful $40 billion acquisition by Nvidia last year. After Nvidia scrubbed the deal and paid a $1.36 billion breakup charge following the U.S. Federal Trade Commission’s unanimous decision to block it, Nvidia disclosed it paid Arm $750 million for a 20-year license to its technology.
At the time of the breakup, chips sales had hit record highs in 2021, surging 26.2% to a record $555.9 billion, fueled by pandemic-triggered shortages. But the chip industry has since swung to a glut.
Arm listed Barclays, Goldman Sachs, JP Morgan, Mizuho, BofA Securities, Citigroup, and Deutsche Bank Securities among the IPO’s underwriters.
Recent reports said SoftBank was in discussions to purchase the 25% stake in Arm that it does not outright own, which is held by its Vision Fund 1, ahead of the IPO.
Read from Feb. 2022: Wall Street’s reaction to death of Nvidia-Arm deal: No duh
Arm reported net income of $524 million, or 51 cents a share, on revenue of $2.68 billion for fiscal 2023, which ended March 31, compared with net income of $549 million, or 54 cents a share, on revenue of $2.7 billion, in fiscal 2022, and $388 million, or 38 cents a share, on revenue of $2.03 billion in fiscal 2021.
Arm uses an architecture that is different from the once-standard x86 one built by Intel in the early days of computing.
The company said it has shipped more than 250 billion Arm-based chips since its started in 1990 as a joint venture between Acorn Computers, Apple
AAPL,
and VLSI Technology. In fiscal 2023, Arm said it shipped 30.6 billion chips.
The company said it is going public as the “resources required to develop leading-edge products are significant and continue to increase exponentially as manufacturing process nodes shrink.” Transistors are expressed in scales of nanometers, with design costs running about $249 million for a 7-nanometer chip and about $725 million for a 2-nm chip.
“As the world moves increasingly towards AI- and [machine language]-enabled computing, Arm will be central to this transition,” the company said in the filing. “Arm CPUs already run AI and ML workloads in billions of devices, including smartphones, cameras, digital TVs, cars and cloud data centers.”
Arm said it is working with Alphabet Inc.
GOOG,
GOOGL,
GM’s
GM,
Cruise, Mercedes-Benz
MBG,
Meta Platforms Inc.
META,
and Nvidia “to deploy Arm technology to run AI workloads.”
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U.S. stock futures moved higher early Monday, as Wall Street looks to snap a three-week losing streak.
On Friday, the Dow Jones Industrial Average
DJIA
rose 26 points, or 0.07%, to 34501, the S&P 500
SPX
declined 1 points, or 0.01%, to 4370, and the Nasdaq Composite
COMP
dropped 26 points, or 0.2%, to 13291.
Futures are striving to find their footing as Wall Street comes off a three-week losing streak.
“Global markets have recently experienced a series of stumbles due to concerns about China’s economy and higher sovereign bond yields. Last week the S&P 500 dropped 2.1 %, worryingly, with every sector ending in the red,” noted Stephen Innes, managing partner at SPI asset management.
Neither of those factors are providing much succor early Monday. A trimming of interest rates over the weekend by China’s central bank has underwhelmed the market, while the 10-year Treasury yield is up about 4 basis points to 4.29%, holding near 15-year highs.
The rising borrowing costs have been a particular problems for some of the big technology stocks that tend to lead the market, according to Innes.
“Last week, several prominent stocks within the S&P 500, such as
GOOGL,
AAPL,
and
NVDA,
all underperformed compared to the broader market index. This dip in performance is attributed to the recent surge in interest rates…This upward rate movement has exerted downward pressure on longer-duration assets,” Innes added.
With that in mind, the reception afforded Nvidia’s results, due on Wednesday, may shape market sentiment for a while. The chipmaker is among the stragglers of an earnings season that has generally beaten forecasts but failed to deliver additional bullish propulsion to the market.
“This picture simply means that the fear of a further Fed tightening, prospects of higher interest rates, combined [with] the set of bad news from China simply didn’t let investors enjoy the better-than-expected earnings,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
However, Tom Lee, head of research at Fundstrat, reckons the recent sell-off will be halted at or before Federal Reserve Chairman Jay Powell makes a speech at the Jackson Hole symposium at the end of the week.
“Over our many conversations with institutional investors in the past week, the vast majority cite the rise in interest rates as the most concerning for equities,” Lee wrote in a note published over the weekend.
And he thinks the Fed is worried by the surge in 10-year yields, too, because it represents a meaningful tightening of financial conditions for markets, companies and households.
“I think the Fed likely says something dovish-ish [sic]. Why? Does Fed want to risk another ‘something breaking’ ala Feb 2023? While some look back at August 2022 when Fed Chair Powell’s statement was hawkish and marked the local top in 2022 (stocks fell -19% next 8 weeks), we think the context is the opposite.” Lee concluded
Zoom video Communications
ZM,
will report results after Monday’s closing bell. There are no top drawer U.S. economic data due Monday.
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