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Tag: Market Research/Public Relations

  • Instagram, other social media should be banned for anyone 16 and under, Ramaswamy says at GOP debate

    Instagram, other social media should be banned for anyone 16 and under, Ramaswamy says at GOP debate

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    Republican presidential hopeful Vivek Ramaswamy took aim at social-media companies during the second GOP presidential debate, saying Wednesday night that he would aim to ban anyone age 16 or under from using those companies’ platforms.

    “If you’re 16 years old or under, you should not be using an addictive social-media product — period,” said Ramaswamy, an entrepreneur who ranks fourth in GOP primary polls, according a RealClearPolitics average.

    He said this move would help with improving mental health and stopping the fentanyl epidemic. Earlier, Ramaswamy had talked about a mom and dad in Iowa whose son died after the teen bought Percocet laced with fentanyl through Snapchat.

    That type of ban would hit companies such as Meta Platforms
    META,
    -0.41%
    ,
    the parent of Instagram and Facebook; Snap
    SNAP,
    +1.80%
    ,
    the parent of Snapchat; X, formerly known as Twitter; and ByteDance, the Chinese parent of TikTok.

    Ramaswamy has started using TikTok in his White House campaign, and another GOP presidential candidate, former U.N. Ambassador Nikki Haley, attacked him over that at another point in the debate.

    “TikTok is one of the most dangerous social-media apps we could have,” she said. “Honestly, every time I hear you, I feel a little bit dumber.”

    Now read: Could Congress actually ban TikTok in the U.S.? Analysts see ‘procedural and practical hurdles’

    And see: GOP presidential debate: DeSantis says Trump’s spending ‘set the stage for the inflation that we have now’

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  • FedEx, Klaviyo, KB Home, CrowdStrike, and More Stock Market Movers

    FedEx, Klaviyo, KB Home, CrowdStrike, and More Stock Market Movers

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  • KB Home stock slips despite earnings beat, raised forecast and ‘steady’ demand

    KB Home stock slips despite earnings beat, raised forecast and ‘steady’ demand

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    KB Home shares declined in the extended session Wednesday even after the home builder reported results that topped Wall Street estimates, hiked its revenue forecast for the year and reported steady demand amid rising mortgage rates.

    KB Home KBH shares slid more than 2% after hours, following a 0.7% decline in the regular session to close at $48.06.

    The…

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  • Instacart, Ford, Pinterest, Coty, Dollar General, Intel, and More Stock Market Movers

    Instacart, Ford, Pinterest, Coty, Dollar General, Intel, and More Stock Market Movers

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  • Tech’s wild week: How Apple, Google, AI, Arm’s mega IPO could set the agenda for years

    Tech’s wild week: How Apple, Google, AI, Arm’s mega IPO could set the agenda for years

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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,
    +0.72%

    seminal iPhone event on the second Tuesday of the month at Apple Park, and anchored by Salesforce Inc.’s
    CRM,
    +0.33%

    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,
    +3.33%
    ,
    Microsoft Corp.
    MSFT,
    +1.21%
    ,
    and Oracle Corp.
    ORCL,
    +0.32%
    .

    Oh, and there’s that initial public offering from Arm Holdings Plc, the chip designer owned by SoftBank Group Corp.
    9984,
    +3.86%

    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,
    +0.51%

    GOOG,
    +0.47%

    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,
    +0.71%

     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,
    +4.82%
    .

    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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  • Here’s an easy way to make a more concentrated play on the ‘Magnificent Seven’ stocks

    Here’s an easy way to make a more concentrated play on the ‘Magnificent Seven’ stocks

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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,
    +0.16%
    ,
    Microsoft Corp.
    MSFT,
    +0.72%
    ,
    Nvidia Corp.
    NVDA,
    -2.03%
    ,
    Amazon.com Inc.
    AMZN,
    +2.17%
    ,
    Alphabet Inc.
    GOOGL,
    -0.27%

    GOOG,
    -0.32%
    ,
    Tesla Inc.
    TSLA,
    +9.37%

    and Meta Platforms Inc.
    META,
    +1.67%
    .
    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,
    +0.16%
    7.05%

    10.85%

    12.46%

    Microsoft Cor.

    MSFT,
    +0.72%
    6.65%

    9.53%

    11.76%

    Amazon.com Inc.

    AMZN,
    +2.17%
    3.30%

    5.50%

    5.84%

    Nvidia Corp.

    NVDA,
    -2.03%
    3.02%

    4.44%

    5.33%

    Alphabet Inc. Class A

    GOOGL,
    -0.27%
    2.17%

    3.12%

    3.83%

    Alphabet Inc. Class C

    GOOG,
    -0.32%
    1.88%

    3.11%

    3.32%

    Tesla Inc.

    TSLA,
    +9.37%
    1.79%

    3.10%

    3.17%

    Meta Platforms Inc. Class A

    META,
    +1.67%
    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.


    FactSet

    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,
    +0.45%
    .

    Examples of stocks held by XLG that aren’t held by QQQ include such non-tech stalwarts as Berkshire Hathaway Inc.
    BRK.B,
    +0.77%
    ,
    Johnson & Johnson
    JNJ,
    +0.79%
    ,
    Procter & Gamble Co.
    PG,
    +0.94%
    ,
    Home Depot Inc.
    HD,
    -0.12%

    and Nike Inc.
    NKE,
    -0.42%
    .

    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.

    Click here for Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.

    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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  • Just how much is the AI discourse helping stocks? An analyst scoured earnings calls for clues

    Just how much is the AI discourse helping stocks? An analyst scoured earnings calls for clues

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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,
    +0.28%
    ,
    Meta Platforms Inc.
    META,
    -0.26%

    and Alphabet Inc.
    GOOG,
    +0.73%

    GOOGL,
    +0.83%

    — 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.

    This week in earnings

    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,
    -3.43%
    ,
    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,
    +0.85%

    and homebuilder Lennar Corp.
    LEN,
    +0.50%

    also report.

    The call to put on your calendar

    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,
    -0.02%

    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.

    The number to watch

    Oracle results, supply situation: Cloud and IT-network developer Oracle Corp.
    ORCL,
    +0.98%

    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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  • Sorry, Elon, a ‘super app’ is never going to fly in the U.S.

    Sorry, Elon, a ‘super app’ is never going to fly in the U.S.

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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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  • Is the Stock Market Open Today? These Are the Trading Hours for Labor Day.

    Is the Stock Market Open Today? These Are the Trading Hours for Labor Day.

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    Is the Stock Market Open Today? These Are the Trading Hours for Labor Day.

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  • My not-so-empty nest and the dirty little secret that no one talks about

    My not-so-empty nest and the dirty little secret that no one talks about

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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.

    The COVID pivot

    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.

    Still working, but from home

    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.

    Growth of gray divorces

    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,
    +0.17%

    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.

    See: This 82-year-old woman ended up traveling alone in France for three weeks. It turned out pretty great.

    Dolly Parton’s secret

    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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  • Labor Day is just a ‘milestone’ in the marathon to get workers back to the office

    Labor Day is just a ‘milestone’ in the marathon to get workers back to the office

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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,
    +0.27%

    to Goldman Sachs
    GS,
    -0.26%

    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,
    +2.18%

    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).

    Return to office isn’t going to save the entire office property market


    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.

    Related: Some employers mandate etiquette classes as returning office workers walk barefoot, burp loudly and microwave fish

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  • Nvidia may be the AI stock for now, but here are the picks for later, says Goldman Sachs

    Nvidia may be the AI stock for now, but here are the picks for later, says Goldman Sachs

    [ad_1]

    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,
    -0.49%
    ,
    Microsoft
    MSFT,
    +0.94%

    or Meta
    META,
    +0.51%
    .


    Goldman Sachs Investment Research

    “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:


    Goldman Sachs

    And a few more:


    Goldman Sachs

    Read: U.S. stocks may bounce this week, but summer selloff is only halfway done, analysts warn

    The markets

    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.

    The buzz

    Microsoft
    MSFT,
    +0.94%

    has proposed a Ubisoft license to win U.K. regulatory approval for its Activision Blizzard
    ATVI,
    +1.09%

    buyout. Activision shares and Ubisoft
    UBI,
    +9.93%

    surged in Paris.

    On the heels of a 7% surge, EV-maker Tesla
    TSLA,
    +2.77%

    is up 1.8%.

    Opinion: SoftBank’s Arm is going public, but it faces a rapidly growing threat

    Lowe’s shares
    LOW,
    +3.34%

    are up after the DIY retailer’s earnings topped expectations, though it notes lower discretionary demand.

    Among Monday’s late earnings news: Fabrinet
    FN,
    +27.25%

    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,
    -4.15%

    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,
    -0.98%

    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.

    Best of the web

    ‘Own what the Mother of All Bubbles crowd doesn’t.’ This market strategist expects stagflation and is investing for it now.

    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.

    The tickers

    These were the top tickers on MarketWatch as of 6 a.m.:

    Ticker

    Security name

    TSLA,
    +2.77%
    Tesla

    NVDA,
    -0.49%
    Nvidia

    AMC,
    -17.31%
    AMC Entertainment

    NIO,
    -1.87%
    Nio

    APE,
    -11.32%
    AMC Entertainment Holdings preferred shares

    TTOO,
    -6.13%
    T2 Biosystems

    GME,
    -3.63%
    GameStop

    AAPL,
    +0.63%
    Apple

    MULN,
    -19.19%
    Mullen Automotive

    AMZN,
    +0.15%
    Amazon.com

    The chart

    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
    :


    @scottcharts

    “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. 

    Random reads

    “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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  • Chip designer Arm files for long-awaited IPO, as smaller transistors send costs skyrocketing

    Chip designer Arm files for long-awaited IPO, as smaller transistors send costs skyrocketing

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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,
    +1.10%
    ,
     Intel Corp.
    INTC,
    +1.19%

     and Nvidia
    NVDA,
    +8.47%
    ,
     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,
    +1.16%
    ,
    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,
    +0.77%

    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,
    +0.64%

    GOOGL,
    +0.71%
    ,
    GM’s
    GM,
    +0.45%

    Cruise, Mercedes-Benz
    MBG,
    +0.78%
    ,
    Meta Platforms Inc.
    META,
    +2.35%
    ,
    and Nvidia “to deploy Arm technology to run AI workloads.”

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  • Stock-index futures gain ground after three-week losing streak

    Stock-index futures gain ground after three-week losing streak

    [ad_1]

    U.S. stock futures moved higher early Monday, as Wall Street looks to snap a three-week losing streak.

    How are stock-index futures trading

    • S&P 500 futures
      ES00,
      +0.51%

      rose 15 points, or 0.3% to 4397

    • Dow Jones Industrial Average futures
      YM00,
      +0.36%

      gained 79 points, or 0.2% to 34644

    • Nasdaq 100 futures
      NQ00,
      +0.70%

      rose 86 points, or 0.5% to 14830

    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.

    What’s driving markets

    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,
    -1.89%
    ,

    TSLA,
    -1.70%
    ,

    META,
    -0.65%
    ,

    AMZN,
    -0.57%
    ,

    MSFT,
    -0.13%
    ,

    AAPL,
    +0.28%
    ,
    and
    NVDA,
    -0.10%
    ,
    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,
    +1.42%

    will report results after Monday’s closing bell. There are no top drawer U.S. economic data due Monday.

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  • ‘Magnificent Seven’ stocks are losing some of their shine, but their bonds are doing fine

    ‘Magnificent Seven’ stocks are losing some of their shine, but their bonds are doing fine

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    The so-called Magnificent Seven grouping of technology stocks lost some of its luster this week after four of the seven moved into correction territory, meaning their stocks have fallen at least 10% from their recent peaks.

    The corporate-bond market, in contrast, seems to like all seven names.

    The group is made up of Facebook parent Meta Platforms Inc.
    META,
    -0.65%
    ,
    Apple Inc.
    AAPL,
    +0.28%
    ,
    Microsoft Corp.
    MSFT,
    -0.13%
    ,
    Nvidia Corp.
    NVDA,
    -0.10%
    ,
    Amazon. com Inc.
    AMZN,
    -0.57%
    ,
    Google parent Alphabet Inc.
    GOOGL,
    -1.89%

    GOOG,
    -1.80%

    and Tesla Inc.
    TSLA,
    -1.70%
    .

    One caveat: Tesla has no outstanding bonds. In the past, the electric-car maker issued convertible bonds, but they have all been converted into equity.

    The group is credited with helping drive the stock market’s gains in the first half of the year, driven by excitement about artificial intelligence. But the rally has stalled in recent weeks as investors have fretted over the potential for U.S. interest-rate increases, surging Treasury yields and China worries, with property developer Evergrande filing for U.S. bankruptcy protection late Thursday.

    On Thursday, Meta followed Apple, Microsoft and Nvidia into correction territory, as MarketWatch’s Emily Bary reported. Tesla, meanwhile, is in a bear market, meaning it’s down more than 20% from its recent peak.

    ReadHave AI stocks like Nvidia reached bubble territory? Here’s what history can tell us.

    The following series of charts from data-solutions provider BondCliQ Media Services show how many bonds each company has issued by maturity and how they have traded as the stocks have pulled back.

    The first chart shows that Microsoft has by far the most bonds, mostly in the 30-year bucket. The software and cloud giant has more than $50 billion in long-term debt, according to its 2023 10-K filing with the Securities and Exchange Commission.

    Outstanding Magnificent Seven debt by maturity bucket.


    Source: BondCliQ Media Services

    This chart shows trading volumes over the last 10 days, divided by trade type. The green shows customer buying, while the red is customer selling. The blue shows dealer-to-dealer flows. Microsoft, for example, has seen almost $1.3 billion in customer buying from dealers in the last 10 days and $960 million in customer sales to dealers.

    Magnificent Seven debt trading volumes (last 10 days).


    Source: BondCliQ Media Services

    This chart shows that every name in the group has enjoyed better net buying in the last 10 days, with Microsoft leading the way.

    Net customer flow of Magnificent Seven debt (last 10 days).


    Source: BondCliQ Media Services

    This chart shows spread performance over the last 50 days for an intermediate-term bond from each of the seven issuers. Most have tightened or remained steady over the period.

    Historical spread performance of Magnificent Seven debt.


    Source: BondCliQ Media Services

    Read also: Red flags waving for tech stocks as AI bounce fades, China fears escalate

    Apple’s stock entered correction Wednesday upon falling more than 10% from its July 31 peak of $196.45. The company sells mainly discretionary products, and right now “consumers are still being pinched” and thinking more carefully about where they spend their money, according to Matt Stucky, senior portfolio manager for equities at Northwestern Mutual Wealth Management.

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  • Nasdaq falls to 6-week low as rising bond yields weigh on ‘Magnificent 7’ stocks

    Nasdaq falls to 6-week low as rising bond yields weigh on ‘Magnificent 7’ stocks

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    U.S. stocks traded lower for a third straight day on Thursday as rising bond yields spurred weakness in some of the so-called Magnificent Seven megacap stocks, helping to drive the Nasdaq to a six-week low.

    How are stocks trading

    • The S&P 500
      SPX
      was down 2 points, or 0.1%, to 4,401.

    • The Dow Jones Industrial Average
      DJIA
      shed 42 points, or 0.1%, to 34,725.

    • The Nasdaq Composite
      COMP
      fell by 46 points, or 0.3%, to 13,428.

    The Dow and S&P 500 were on track to extend a losing streak to a third straight session as major indexes headed for another week in the red. The S&P 500 hasn’t fallen for three weeks in a row since February, FactSet data show.

    What’s driving markets

    Bonds have resumed command of the stock market of late as higher yields lash shares of megacap technology stocks, undermining their status as the undisputed market leaders.

    Long-dated Treasury yields continued to rise Thursday, with the 10-year yield
    BX:TMUBMUSD10Y
    touching its highest level since the 2008 financial crisis, rising north of 4.31%. Bond yields move inversely to prices.

    Rising yields helped heap more pressure on shares of some of this year’s highflying tech stocks, including Tesla Inc.
    TSLA,
    -0.34%
    ,
    Apple Inc.
    AAPL,
    -0.91%

    and Microsoft Corp.
    MSFT,
    -0.01%

    The elite group of megacap tech stocks which also includes Amazon.com Inc., Meta Platforms Corp.
    META,
    -0.24%

    and Alphabet Inc.’s Class A
    GOOGL,
    +2.42%

    and Class C
    GOOG,
    +2.48%

    shares has been credited with driving much of the Nasdaq Composite’s nearly 30% run-up year-to-date. But their market dominance has faded in recent weeks as investors have favored other cyclical sectors like energy and materials stocks. Those two sectors were the best performers on the S&P 500 on Thursday.

    “That’s a theme that’s been bubbling up here over the last three to four weeks, but there’s more of an exclamation point on it now,” said David Keller, chief market strategist at Stockcharts.com, during a phone interview with MarketWatch.

    “First you had Microsoft and Apple breaking down a few weeks ago, now you’re getting Meta breaking below its 50-day moving average.”

    Keller added that rising bond yields tend to have a bigger impact on growth stocks like technology names, while sectors like energy are more resilient.

    “Energy can do just fine in a rising rate environment. energy and materials should probably do better in a relative basis,” he said.

    Minutes from the Federal Reserve’s July meeting released Wednesday afternoon were being blamed for the latest leg higher in global bond yields. They showed that Fed policy makers could continue raising interest rates amid concerns that inflation could reaccelerate, potentially pushing bond yields even higher.

    “It’s really uncertain where terminal interest rates will land given the economy isn’t giving us a decisive picture of being too strong or too weak. It’s keeping the window open for more rate hikes potentially,” said Mohannad Aama, a portfolio manager at Beam Capital Management, during a phone interview with MarketWatch.

    Corporate earnings were also in focus as investors received results from Cisco Systems
    CSCO,
    +4.06%

    and retail giant Walmart Inc.
    WMT,
    -1.74%
    .
    Cisco reported strong quarterly results after Wednesday’s close. Walmart also reported stronger than expected earnings, helping to offset some concerns about the strength of the consumer spurred by Target Corp.’s
    TGT,
    +1.94%

    lackluster earnings and guidance from Wednesday.

    Shares of Cisco rose 2.6%, while Walmart shares turned lower, down 1.2%.

    Economic updates released Thursday helped support the notion that the U.S. economy is growing at a faster pace than economists had expected, potentially complicating the Fed’s efforts to tamp down inflation.

    First-time jobless-benefit claims fell by 11,000 to 239,000 last week, a sign that layoffs in the U.S. labor market remain low. The Philadelphia Fed factory index also shot higher to 12 in August, up from negative 13.5 during the prior month, a sign that manufacturers in the U.S. could be exiting a slump.

    Companies in focus

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  • Elon Musk vs. Mark Zuckerberg: The stupidest story of the summer appears over

    Elon Musk vs. Mark Zuckerberg: The stupidest story of the summer appears over

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    The stupidest story of the summer may be over. Finally, mercifully.

    Mark Zuckerberg, billionaire and chief executive of Meta Platforms Inc.
    META,
    -1.34%
    ,
    on Sunday appeared to pull the grown-up card — or at least the less-immature card — to scuttle a cage fight with Elon Musk, the even richer billionaire, Tesla Inc.
    TSLA,
    -1.10%

    CEO and X owner.

    From the start, it was a story that appeared to live mostly in Musk’s imagination. Yet it still sparked a media frenzy, as the prospect of two emotionally stunted billionaires publicly pummeling each other was not without some appeal.

    But the proposed MMA-style fight apparently met its demise the same way it was born — through a lot of online bluster.

    Weeks after proposing the fight, then resorting to multiple delaying tactics while noting how out of shape and unprepared he was, Musk apparently reached out to Zuckerberg over the weekend asking for a “practice bout” first.

    Author and journalist Walter Isaacson — who is currently writing a biography of Musk — tweeted a text exchange Sunday that he said Musk had sent him.

    “Wanna do a practice bout at your house next week?” a text apparently from Musk reads. The reply, purportedly from Zuckerberg: “If you still want to do a real MMA fight, then you should train on your own and let me know when you’re ready to compete. I don’t want to keep hyping something that will never happen, so you should either decide you’re going to do this and do it soon, or we should move on.”

    In real news: Tesla cuts prices for some Model Y versions in China, as price war ramps back up

    Zuckerberg later posted a more public burn on Meta’s Threads — the Twitter/X rival that sparked this whole thing to begin with — saying: “I think we can all agree that Elon isn’t serious and it’s time to move on…If Elon ever gets serious about a real date and official event, he knows how to reach me. Otherwise, time to move on. I’m going to focus on competing with people who take the sport seriously.”

    It was unclear what the two billionaires now plan to do with their spare time, if not fight each other.

    In completely unrelated news, fellow mega-billionaire and Amazon.com Inc.
    AMZN,
    -0.11%

    founder Jeff Bezos and his fiancée announced a $100 million donation Friday to Maui wildfire relief efforts.

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  • The long-simmering rumor of Apple buying Disney is resurfacing as Bob Iger looks to sell assets

    The long-simmering rumor of Apple buying Disney is resurfacing as Bob Iger looks to sell assets

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    Analysts got to the point early and often during a conference call late Wednesday: What are Disney Chief Executive Robert Iger’s M&A plans, particularly following reports that former Disney executives Kevin Mayer and Tom Staggs, now co-CEOs of Blackstone-backed Candle Media, have been retained in a “consulting capacity” to decide ESPN’s fate?

    There is even the unthinkable, unsinkable decades-old rumor floating about again: Could Apple Inc.
    AAPL,
    -0.90%

    acquire Disney
    DIS,
    -0.73%
    ,
    as one Hollywood executive floated to the Hollywood Reporter?

    The prospect of an Apple-Disney combo seems far-fetched in a heated regulatory climate, where the Federal Trade Commission is attempting to crack down on Big Tech acquisitions, but it could happen should Disney sell off assets and Apple gobbles up Disney’s direct-to-consumer business that includes streaming service Disney+, some media analysts speculate. Apple could conceivably even buy ABC, which reportedly is on the block. But the path is long and circuitous.

    Yet the rumors persist, dating back to Apple co-founder Steve Jobs’ reverence for the Disney brand, and the increasingly overlapping businesses of both companies over the years.

    When pressed by analysts during a conference call late Wednesday, Iger declined to discuss the future of Disney’s structure or possible asset sales. When asked if Disney might “plausibly” be snapped up by one company — read Apple — an exasperated Iger said he would not “speculate” on the sale of Disney to a technology company or anyone else, given the current global stance of regulators. The FTC has aggressively challenged mergers from the likes of Microsoft Corp.
    MSFT,
    -1.17%

    and Facebook parent Meta Platforms Inc.
    META,
    -2.38%
    ,
    with limited success.

    Since Iger hinted at the potential sale of Disney’s assets in an interview with CNBC last month, rumors have swirled around ESPN.

    ESPN and related properties likely could command at least one-third of Disney’s current depressed market cap of about $150 billion, say some media watchers, though Iger has denied ESPN is for sale. He has acknowledged “the sports leader” is seeking “strategic partners” — possibly with the NFL, MLB, NBA and NHL — to generate revenue. Late Tuesday, ESPN stuck up a deal with Penn Entertainment Inc.
    PENN,
    +9.10%

    to create ESPN Bet, a digital sportsbook to launch in the fall in 16 states.

    Read more: Penn dumps Barstool for ESPN-branded sports-gambling service

    Another possible property being dangled is ABC. But with rights to the NBA Finals and two Super Bowls in the next eight years, it is unclear who would acquire the network and how Disney would replace lucrative sports revenue.

    Other properties on the block include cable channels Freeform and Disney Channel, according to a report by the Wall Street Journal.

    “If an asset sale happens, will the proceeds be deployed into fortifying its balance sheet or beefing up its remaining operations?” Rick Munarriz, senior media analyst at The Motley Fool, said in an email.

    Disney, which is in the midst of a $5.5 billion cost-cutting campaign, is exploring several avenues to prop up sales as linear TV ads shrink, Disney+ subscriptions decline and attendance at Walt Disney World wanes.

    Read more: Disney posts smaller streaming loss amid cost-cutting moves, stock slips

    Shares of Disney are trading at half their highs from a few years ago, in large part because of dwindling sales and profits at ESPN and Disney’s other cable networks.

    Enter Mayer, who previously ran Disney’s strategic planning group for years and engineered a trifecta of mega deals: The acquisition of the aforementioned Pixar Animation Studios from Steve Jobs for $7.4 billion in 2006, the purchase of Marvel Entertainment for $4 billion in 2009, and the acquisition of Lucasfilm for $4.05 billion in 2012. Mayer also led the $71.3 billion acquisition of 20th Century Fox’s entertainment assets in 2019, which has drawn mixed reviews.

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  • Apple’s Tim Cook explains why he won’t showboat around AI

    Apple’s Tim Cook explains why he won’t showboat around AI

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    “We tend to announce things as they come to market, and that’s our M.O.”


    — Apple CEO Tim Cook

    If Apple Inc.’s Thursday earnings call sounded a bit different than other recent ones from Big Tech players, perhaps that was due to a noticeable lack of artificial-intelligence discussion.

    In fact, AI didn’t come up at all on Apple’s
    AAPL,
    -0.73%

    call until an analyst brought up the topic in the question-and-answer portion, commenting that Apple executives “don’t talk too much” about their AI strategy or investments, unlike many tech peers.

    See also: Apple sees sales decline for third quarter in a row — and says performance could be similar this quarter

    “If you take a step back, we view AI and machine learning as core fundamental technologies that are integral to virtually every product that we build,” Chief Executive Tim Cook replied. AI helps power recently announced software features like live voicemails and the ability to replicate your voice digitally, as well as somewhat older features like automatic crash detection and fall detection.

    AI technology has been “absolutely critical to us,” Cook said, and Apple has “been doing research across a wide range of AI technologies, including generative AI, for years,” something the company plans to continue.

    But don’t necessarily expect Apple to start showboating around its AI efforts going forward: Cook said that Apple’s “M.O.” simply is to announce products when they’re ready for consumers.

    “Apple’s reticence in being dragged into the AI hype is on-brand,” Forrester principal analyst Dipanjan Chatterjee said in emailed comments. “A maniacal focus on what Apple does for its customers and not how it does it is rooted so deeply in the brand’s DNA.”

    In all, there were just six mentions of AI or artificial intelligence on Apple’s earnings call, all of which came during the Q&A exchange with Deutsche Bank analyst Sidney Ho. Compare that to 90 mentions of those terms on Alphabet Inc.’s
    GOOG,
    +0.10%

    GOOGL,
    +0.05%

    earnings call last week, 73 mentions on Microsoft Corp.’s
    MSFT,
    -0.26%
    ,
    and 62 mentions on Meta Platforms Inc.’s
    META,
    -0.36%
    ,
    according to MarketWatch’s review of transcripts provided by AlphaSense/Sentieo.

    Read: Microsoft and Google can’t stop talking about AI, and this chart proves it

    Amazon.com Inc.
    AMZN,
    +0.55%
    ,
    which joined Apple in posting results Thursday, falls somewhere in the middle. The topic of AI garnered 34 mentions on Amazon’s call.

    Whereas Apple has been consistent with its scant mentions of the technology, Amazon executives have been ramping up the rhetoric: AlphaSense/Sentieo data shows just one AI mention on the earnings call Amazon held in February 2022, and then no mentions until the term came up 12 times on its April 2023 call. Volume was of course up considerably from there on Thursday’s call.

    See also: The ‘stabilization’ of AWS may have been the most significant number for Amazon’s earnings

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  • The ‘narrow breadth’ chorus has fallen silent. What broadening participation in stock-market rally means for investors.

    The ‘narrow breadth’ chorus has fallen silent. What broadening participation in stock-market rally means for investors.

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    A wider swath of stocks have joined the S&P 500
    SPX,
    +0.15%
    ’s
    upswing after the so-called Magnificent Seven — Apple
    AAPL,
    +0.32%
    ,
    Amazon
    AMZN,
    +1.11%
    ,
    Alphabet
    GOOG,
    +0.08%
    ,
    Microsoft
    MSFT,
    -0.72%
    ,
    Meta
    META,
    -2.11%
    ,
    Nvidia
    NVDA,
    -0.04%

    and Tesla
    TSLA,
    +0.37%

    — single-handedly propelled the large-cap index into a bull market in early June, with the gauge now up more than 28% from its low notched last October and rising to new highs since April 2022, according to Dow Jones Market Data. 

    Hopes that the U.S. economy could pull off a soft landing and avoid a recession despite the Federal Reserve’s aggressive interest-rate hikes, as well as receding inflation pressures and expectations for the end of the Fed’s monetary tightening campaign, have underpinned a notable expansion in market breadth over the past two months, according Adam Turnquist, chief technical strategist at LPL Financial. 

    The S&P 500 Equal Weighted Index
    SP500EW,
    +0.27%
    ,
    which lagged behind the market-cap-weighted S&P 500 index for most of the year, has now kicked back into gear and staged an impressive comeback in July. The equal-weighted index and the S&P 500 each advanced 3.1% this month, according to FactSet data. 

    The equal weighting eliminates the distortion of the megacap components and significantly changes several sector weightings in the S&P 500, including technology, which drops from around 29% on the SPX to only 13% on the equal-weighted index, said Turnquist in a Friday note. Meanwhile, the industrials sector has the biggest increase in weight, jumping from 9% on the SPX to 16% on the equal-weighted index.

    Another way to quantify and compare market breadth is to look at the percentage of stocks on an index trading above their longer-term 200-day moving average (dma), Turnquist said. In general, if a stock is trading above its 200 dma, it is considered to be in an uptrend, and if the price is below the 200 dma, it is considered in a downtrend. Furthermore, a higher percentage of stocks above their 200 dma implies buying pressure is more widespread — suggesting the market’s advance is likely sustainable.

    The chart below shows that 73% of stocks within the S&P 500 are trading above their 200 dma as of July 27, which compares to only 48% at the end of 2022. Moreover, the composition of breadth leadership has turned increasingly bullish. The highest sector readings include technology, industrials, energy, and consumer discretionary.

    “So not only is breadth on the index robust, but cyclical stocks are also leading,” said Turnquist. 

    SOURCE: LPL RESEARCH, BLOOMBERG

    Wall Street often views broadening participation in the stock-market rally as a measure of health and a constructive sign of the sustainability of the bull market. 

    Jimmy Lee, founder and chief executive officer of The Wealth Consulting Group said he is seeing “a lot of money” flowing into areas that are not the Magnificent Seven such as stocks in the industrials, financials, materials, energy and even real-estate sectors.

    The S&P 500’s industrials sector
    SP500.20,
    +0.23%

    climbed 2.9% in July, while the financials sector
    SP500.40,
    +0.44%

    advanced over 4.7% this month. The S&P 500’s energy sector
    SP500.10,
    +2.00%
    ,
    which had been the biggest laggard when the rest of the markets exited the bear market in June, jumped 7.3% month to date after the U.S. oil benchmark
    CL.1,
    -0.20%

    CL00,
    -0.20%

    closed above $80 a barrel for the first time since April. 

    Meanwhile, the tech-heavy S&P 500’s communication-services sector
    SP500.50,
    -0.03%

    rose 6.7% in July, while the consumer-discretionary sector
    SP500.25,
    +0.56%

    gained 2.4% and the information-technology sector
    SP500.45,
    +0.13%

    was up 2.6%, according to FactSet data. 

    See: Stocks are on a seemingly unstoppable hot streak, but this bond-market ‘tipping point’ could see it end in a hurry

    Stephen Hoedt, managing director of equity and fixed income research at Key Private Bank, told MarketWatch in an interview that he doesn’t see “any reason to get bearish here with the fundamentals that are underlying,” which gives investors reason to rotate toward the more cyclical areas such as energy, financials and industrials, while broadening the market away from just being concentrated in the megacap technology names. 

    “The growth has been a surprise this year for everyone, so that’s what the market got wrong coming into this year. When I look at growth, nominal GDP growth translates directly into earnings and we’ve seen earnings continue to surprise on the upside,” Hoedt said. 

    Hoedt pointed to the direction of the 12-month forward earnings estimate for the S&P 500 as an important indicator. “As long as the direction of the 12-month forward earnings number for the S&P 500 is going up, it’s really, really difficult to be bearish on the stock market,” he said. “It seems to me that we may start to see another inflection higher in forward earnings revisions that take into account this stronger growth environment that we’re in.” 

    However, the broadening of the stock-market rally and the bullish sentiment were also driving some on Wall Street to believe stocks are overbought and due for a correction. 

    Lee said there’s still too much pessimism out there and too much concern that some investors haven’t chased the market yet. “In the second half of this year, when the Fed does stop raising rates and if the economy stays out of recession, you can see major money — trillions of dollars moving from the money market into equities and other risk assets,” he told MarketWatch in a phone interview on Friday.

    “When that happens, it’s probably going to push valuations even further. So I would imagine when that happens is when you can expect more of a correction to occur, but I think that we still have more room to go before that happens.” 

    U.S. stocks ended higher on Monday, finishing up July on a positive note. Three major stock indexes rallied this month, with the S&P 500 up 3.1% and booking its fifth monthly gain. The tech-heavy Nasdaq Composite
    COMP,
    +0.21%

    gained 4.1% month to date, while the Dow Jones Industrial Average
    DJIA,
    +0.28%

    advanced 3.4%, according to Dow Jones Market Data. 

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