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Tag: Microsoft Corp

  • Analysts expect a big earnings drop this season. These 14 stocks are set to buck the trend

    Analysts expect a big earnings drop this season. These 14 stocks are set to buck the trend

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    An Amazon Prime truck is pictured as it crosses the George Washington Bridge on Interstate Route 95 during Amazon’s two-day “Prime Early Access Sale” shopping event for Amazon members in New York, October 11, 2022.

    Mike Segar | Reuters

    Wall Street expects a weak first-quarter earnings season, which kicks off next week with results from JPMorgan Chase (JPM) and other major U.S. banks. But more than a dozen Club holdings, including Amazon (AMZN) and Caterpillar (CAT), are projected to buck the trend and grow profits.

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  • U.S. stocks have barely budged since last summer. Where will they go next?

    U.S. stocks have barely budged since last summer. Where will they go next?

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    U.S. stocks have shrugged off a number of threats since the start of the year, powering through the worst U.S. bank failures since the 2008 financial crisis, while resisting the pull of rising short-term Treasury yields.

    This helped all three main U.S. equity benchmarks finish the first quarter in the green on Friday, but that doesn’t change the fact that the S&P 500 index, the main U.S. equity benchmark, has barely budged since last summer.

    “The market has handled a lot of gut punches recently and it’s still standing in this range,” said JJ Kinahan, CEO of IG North America, owner of brokerage firm Tastytrade. “I think that’s a sign that the market is very healthy.”

    The S&P 500 index
    SPX,
    +1.44%

    traded at 4,110.41 on Sept. 12, 2022, according to FactSet data, just before aggressive Federal Reserve commentary on interest rates and worrisome inflation data triggered a sharp selloff. By comparison, the index finished Friday’s session at 4,109.31.

    Some equity analysts expect it to take months, or perhaps even longer, for U.S. stocks to break out of this range. Where they might go next also is anyone’s guess.

    Investors likely won’t know until some of the uncertainty that has been plaguing the market over the past year clears up.

    At the top of the market’s wish list is more information about how the Fed’s interest rate hikes are impacting the economy. This will be crucial in determining whether the central bank might need to keep raising interest rates in 2024, several analysts told MarketWatch.

    Stocks are volatile, but stuck in a circle

    The S&P 500 has vacillated in a roughly 600-point range since September, but at the same time, the number of outsize swings from day-to-day has become even more pronounced, making it more difficult to ascertain the health of the market, analysts said.

    The S&P 500 rose or fell by 1% or more in 29 trading sessions in the first quarter, including Friday, when the S&P 500 closed 1.4% higher on the last session of the month and quarter, according to Dow Jones Market Data.

    That’s nearly double the quarterly average of just 14.9 days going back to 1928, according to Dow Jones Market Data. The S&P 500 was created in 1957, and performance data taken from before then is based on a historical reconstruction of the index’s performance.

    Stocks also look almost placid in comparison with other assets. For example, Treasurys saw an explosion of volatility in the wake of the collapse of Silicon Valley Bank in March. The 2-year Treasury yield
    TMUBMUSD02Y,
    4.114%

    logged its largest monthly decline in 15 years in March as a result.

    “You can’t find any clues about where we’re going by watching the S&P 500,” said John Kosar, chief market strategist at Asbury Research, in a phone interview with MarketWatch. “Ten years ago, you could look at the movement of the S&P 500 and a simple indicator like volume and get a back-of-the-envelope idea of how healthy the market is. But you can’t do that anymore because of all this intraday volatility.”

    See: Stock-option traders are creating explosive volatility in the market. Here’s what that means for your portfolio.

    The S&P 500’s 7% advance in the first quarter of this year has helped to mask weakness underneath the surface. Specifically, only 33% of S&P 500 companies’ shares have managed to outperform the index since the start of the quarter, well below the long-term average, according to figures provided to MarketWatch by analysts at UBS Group UBS.

    Mega stocks, Fed to the rescue?

    If it weren’t for a flight-to-safety rally in large capitalization technology names like Apple Inc.
    AAPL,
    +1.56%
    ,
    Microsoft Corp.
    MSFT,
    +1.50%

    and Nvidia Corp.
    NVDA,
    +1.44%
    ,
    the S&P 500 and Nasdaq would likely be in much worse shape.

    Advancing megacap tech stocks have helped the Invesco QQQ
    QQQ,
    +1.66%

    Trust exchange-traded fund, which tracks the Nasdaq 100, enter a fresh bull market in the past week, as the closely watched market gauge closed more than 20% above its 52-week closing low from late December, according to FactSet data. That’s helped to offset weakness in cyclical sectors like financials and real estate.

    Tech behemoths have also benefited from the hype around artificial intelligence platforms like OpenAI’s ChatGPT.

    Confusion about the Fed’s quantitative tightening efforts to reduce the size of its balance sheet also helped muddle the outlook for markets.

    For example, the size of the Fed’s balance sheet has increased again in recent weeks as banks have tapped the central bank’s emergency lending programs in the wake of the failure of two regional banks, undoing some of the central bank’s efforts to shrink its balance sheet by allowing some of its Treasury and mortgage-backed bond holdings to mature without reinvesting the proceeds.

    Some analysts said this is akin to sending the market mixed signals.

    “It seems to be both tightening and loosening right now,” said Andrew Adams, an analyst with Saut Strategy, in a recent note to clients.

    What it takes for a break out

    U.S. stocks have remained rangebound for long stretches in the past.

    Beginning in late 2014, the S&P 500 traded in a tight range for roughly two years. Between Jan. 1, 2015 and Nov. 9, 2016, the day after former President Donald Trump defeated Hillary Clinton to become president of the U.S., the S&P 500 gained less than 100 points, according to FactSet data.

    At the time, equity analysts blamed signs of softening economic activity in China and weakness in the U.S. energy industry for the market’s lackluster performance.

    But after once it became clear that Trump would win the White House, stocks embarked on a steady ascent as investors bet that the Republican economic agenda, which included corporate tax cuts and deregulation, would likely bolster corporate profits.

    It wasn’t until the fourth quarter of 2018 that stocks turned volatile once again as the S&P 500 wiped out its gains from earlier in the year, before ultimately finishing 2018 with a 6.2% drop for the year, according to FactSet.

    As investors brace for a flood of first-quarter corporate earnings in the coming weeks, Kinahan said he expects stocks could remain range bound for at least a few more months.

    “There’s going to be a very cautious outlook still, which should keep us in this range,” he said.

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  • CNBC Daily Open: Investors are pricing in the best of both worlds

    CNBC Daily Open: Investors are pricing in the best of both worlds

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    A Wall St. sign in front of the New York Stock Exchange (NYSE) in New York, US, on Monday, March 20, 2023.

    Michael Nagle | Bloomberg | Getty Images

    This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

    Investor fears subside. Is it premature?

    What you need to know today

    • U.S. markets traded higher Thursday as a measure of market volatility showed investor fears are abating. Asia-Pacific stocks mostly rose Friday. Japan’s Nikkei 225 climbed 0.91% as the country’s consumer price index (excluding fresh food) rose 3.2% in March, 10 basis points lower than February’s reading.
    • In the event of a bank rescue in the European Union, the EU will start by “absorbing equity stack, and then the AT1 and then the Tier 2 and then the rest,” Dominique Laboureix, chair of the EU’s Single Resolution Board, told CNBC in an exclusive interview.

    The bottom line

    Fears are subsiding and markets are rebounding. But it’d be too premature to celebrate — at least not until we find out how the economy’s doing from reports coming out soon.

    Yesterday, all major indexes rose. The S&P 500 climbed 0.57%, the Dow Jones Industrial Average advanced 0.43% and the Nasdaq Composite added 0.73%. Investors continued flocking to technology stocks: Amazon rose 1.75%, Microsoft gained 1.26% and Netflix climbed 1.93%. “The Silicon Valley Bank fiasco was just the oxygen the tech bull needed to snap out of its funk and get back to work,” CNBC’s Jim Cramer said.

    How do we know investors are regaining confidence, other than inferring their sentiment from market moves? We look at the CBOE Volatility Index. Derived from the price of S&P 500 options, the volatility index measures the market’s expectations of how the S&P will move over the next 30 days. Hence, it serves as a proxy of investors’ fears. Currently, it’s around levels last seen at the start of March, before SVB collapsed.

    In other words, markets seem to be pricing in the best of both words: “a recession that allows rates to be low and brings inflation down sharply, yet one that does not have a massively negative effect on corporate earnings,” Ajay Rajadhyaksha, global chairman of research at Barclays, wrote in a Thursday note.

    That might be premature, as Rajadhyaksha suggests. While yesterday’s jobless claims number is 7,000 more than the previous week’s, it’s still below what the Federal Reserve would like to see for the labor market to slow substantially. We’ll get more granular data on the economy with the release of the Personal Consumption Expenditures Price Index later today, and the March jobs report next week.

    For now, though, it’s undeniably nice to have a respite from the banking crisis.

    — CNBC’s Dan Mangan contributed to this report

    Subscribe here to get this report sent directly to your inbox each morning before markets open.

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  • CNBC Daily Open: Markets are pricing in the best of both worlds

    CNBC Daily Open: Markets are pricing in the best of both worlds

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    A man stands on the floor of the New York Stock Exchange (NYSE) on March 23, 2023 in New York City.

    Spencer Platt | Getty Images News | Getty Images

    This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

    Investor fears subside. Is it premature?

    What you need to know today

    The bottom line

    Fears are subsiding and markets are rebounding. But it’d be too premature to celebrate — at least not until we find out how the economy’s doing from reports coming out soon.

    Yesterday, all major indexes rose. The S&P 500 climbed 0.57%, the Dow Jones Industrial Average advanced 0.43% and the Nasdaq Composite added 0.73%. Investors continued flocking to technology stocks: Amazon rose 1.75%, Microsoft gained 1.26% and Netflix climbed 1.93%. “The Silicon Valley Bank fiasco was just the oxygen the tech bull needed to snap out of its funk and get back to work,” CNBC’s Jim Cramer said.

    How do we know investors are regaining confidence, other than inferring their sentiment from market moves? We look at the CBOE Volatility Index. Derived from the price of S&P 500 options, the volatility index measures the market’s expectations of how the S&P will move over the next 30 days. Hence, it serves as a proxy of investors’ fears. Currently, it’s around levels last seen at the start of March, before SVB collapsed.

    In other words, markets seem to be pricing in the best of both words: “a recession that allows rates to be low and brings inflation down sharply, yet one that does not have a massively negative effect on corporate earnings,” Ajay Rajadhyaksha, global chairman of research at Barclays, wrote in a Thursday note.

    That might be premature, as Rajadhyaksha suggests. Yesterday’s jobless claims number, while reporting an increase, is still below what the Federal Reserve would like to see for the labor market to slow substantially. We’ll get more granular data on the economy with the release of the Personal Consumption Expenditures Price Index later today, and the March jobs report next week.

    For now, though, it’s undeniably nice to have a respite from the banking crisis.

    — CNBC’s Dan Mangan contributed to this report.

    Subscribe here to get this report sent directly to your inbox each morning before markets open.

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  • Barclays highlights 10 top quality stocks that are also cheap

    Barclays highlights 10 top quality stocks that are also cheap

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  • UK watchdog softens position on Microsoft Activision deal

    UK watchdog softens position on Microsoft Activision deal

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    LONDON (AP) — British antitrust regulators scrutinizing Microsoft’s blockbuster purchase of videogame maker Activision Blizzard on Friday dropped concerns that the deal would hurt the console gaming market, narrowing the scope of their investigation.

    The Competition and Markets Authority said it no longer thinks the $69 billion deal will result in a “substantial lessening of competition” for console games in the U.K., an update to provisional findings issued last month based on new evidence.

    The all-cash deal is set to be the biggest in the history of the tech industry. But it faces stiff opposition from rival Sony and is being examined by regulators in the U.S. and Europe over fears that it would give Microsoft control of popular game franchises like Call of Duty.

    The purchase hit a hurdle last month when the U.K. watchdog said in its initial decision that the deal would stifle competition for both cloud and console gaming.

    Based on the new evidence, including data that gives better insight into videogamers’ purchasing behavior, the watchdog said it “would not be commercially beneficial” for Microsoft to make Call of Duty exclusive to its Xbox console. That’s the opposite of its original analysis, which indicated that it would be profitable to block the game from competing consoles like Sony’s PlayStation.

    “The cost to Microsoft of withholding Call of Duty from PlayStation would outweigh any gains from taking such action,” Martin Coleman, chair of the CMA’s independent expert panel investigating the deal, said in a press release.

    The watchdog is still investigating the deal’s impact on the cloud computing market and plans to issue a final report by April 26.

    Microsoft said it welcomed the findings and would work with the watchdog “to resolve any outstanding concerns.”

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  • Pro Picks: Watch all of Friday’s big stock calls on CNBC

    Pro Picks: Watch all of Friday’s big stock calls on CNBC

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  • Bank fears will likely lead to even more market volatility in the week ahead

    Bank fears will likely lead to even more market volatility in the week ahead

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  • Activision shares jump as British competition regulator drops key concern on Microsoft takeover

    Activision shares jump as British competition regulator drops key concern on Microsoft takeover

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    An Activision Blizzard’s Call of Duty: Modern Warfare video game is inserted into the Microsoft’s Xbox One video game console arranged in Denver, Colorado, on Wednesday, Jan. 19, 2022.

    Michael Ciaglo | Bloomberg | Getty Images

    Shares of Activision Blizzard surged Friday, after the U.K.’s Competition and Markets Authority narrowed the scope of its investigation into Microsoft‘s takeover of the games publisher.

    The development marks a partial win for Microsoft, as it pursues an expansion of its video game business. The Redmond, Washington-based technology giant has deepened its focus on gaming through blockbuster acquisitions, such as its purchase of ZeniMax Media, the parent company of Bethesda Softworks.

    related investing news

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    In February, the CMA published provisional findings from its probe into the takeover, stating at the time that the transaction may result in higher prices, fewer choices and less innovation. Among its concerns, the regulator flagged that the deal would cause a substantial lessening of competition in the console gaming market.

    Since then, the regulator has received a “significant amount” of feedback from various industry participants on the deal. With this new evidence, the CMA now says it no longer believes the transaction will hamper competition in console games.

    “Having considered the additional evidence provided, we have now provisionally concluded that the merger will not result in a substantial lessening of competition in console gaming services because the cost to Microsoft of withholding Call of Duty from PlayStation would outweigh any gains from taking such action,” Martin Coleman, chair of the independent panel of experts conducting the CMA investigation, said in a statement Friday.

    “Our provisional view that this deal raises concerns in the cloud gaming market is not affected by today’s announcement. Our investigation remains on course for completion by the end of April.”

    Shares of Activision Blizzard were up more than 5% in morning trading in the U.S., after earlier surging more than 7% to a new 52-week high. Microsoft’s stock declined slightly amid a broad market slump.

    Call of Duty distribution in focus

    The CMA announcement comes after the U.S. technology giant has also won support from some companies that were against the deal, or sitting on the fence.

    One of the major concerns from Microsoft’s competitors was that the transaction would block distribution access to Activision’s crown jewel franchise — Call of Duty. Last month, Microsoft said it signed a “binding 10-year legal agreement” to bring Call of Duty to Nintendo players on the same day as Microsoft’s Xbox, “with full feature and content parity.”

    Additionally, Microsoft signed a deal with Nvidia to bring its Xbox games to Nvidia’s GeForce Now cloud gaming service. Microsoft said it would also bring the Activision games library to Nvidia’s service, if the acquisition closes. Nvidia was reportedly against Microsoft’s Activision takeover. 

    But Microsoft has yet to bring onside its biggest rival, Sony, which owns the PlayStation console. Microsoft President Brad Smith told CNBC last month that the company is offering Sony the same agreement as it did Nintendo — to make Call of Duty available on PlayStation at the same time as on Xbox, with the same features. Sony still opposes the deal.

    Microsoft looks to allay EU fears over Activision takeover with Nintendo, NVIDIA deals

    “We appreciate the CMA’s rigorous and thorough evaluation of the evidence and welcome its updated provisional findings,” a Microsoft spokesperson told CNBC via email.

    “This deal will provide more players with more choice in how they play Call of Duty and their favorite games. We look forward to working with the CMA to resolve any outstanding concerns.”

    An Activision spokesperson told CNBC that the CMA’s updated provisional findings “show an improved understanding of the console gaming market and demonstrate a commitment to supporting players and competition.”

    “Sony’s campaign to protect its dominance by blocking our merger can’t overcome the facts, and Microsoft has already presented effective and enforceable remedies to address each of the CMA’s remaining concerns. We know this deal will benefit competition, innovation, and consumers in the UK.”

    Microsoft is not completely off the hook.

    The CMA says it still has reservations about the deal as it pertains to cloud gaming, where delivery of games content is handled from remote servers rather than from a device’s internal memory. Notably, cloud gaming is still in its infancy and not yet a mass-market technology.

    In its provisional conclusions, the CMA suggested that Microsoft may need to divest part or all of Activision — or its CoD franchise alone — to resolve its concerns. The CMA did not provide an update as to whether it believes this remains a potential resolution.

    The watchdog will make its final decision on April 26.

    Microsoft also still faces uncertainty from regulators in the U.S. and European Union. Smith traveled to Brussels last month to meet with EU regulators. In the U.S., the Federal Trade Commission filed an antitrust case against Microsoft attempting to block the Activision deal.

    Some major companies retain reservations about the acquisition, which includes Google parent Alphabet, according to Bloomberg.

    — CNBC’s Steve Kovach contributed to this report.

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  • Time to buy the tech rally? Hedge fund manager Dan Niles and others reveal their top picks

    Time to buy the tech rally? Hedge fund manager Dan Niles and others reveal their top picks

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  • U.S. stocks end lower, Dow books back-to-back weekly losses as banking sector stress reemerges

    U.S. stocks end lower, Dow books back-to-back weekly losses as banking sector stress reemerges

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    U.S. stocks ended lower Friday as worries about banking-sector stability reemerged following a bankruptcy filing by SVB Financial Group and the release of data showing banks borrowed $165 billion from the Federal Reserve over the past week.

    How stocks traded
    • The Dow Jones Industrial Average
      DJIA,
      -1.19%

      fell 384.57 points, or 1.2%, to close at 31,861.98.

    • The S&P 500
      SPX,
      -1.10%

      dropped 43.64 points, or 1.1%, to finish at 3,916.64.

    • The Nasdaq Composite
      COMP,
      -0.74%

      slid 86.76 points, or 0.7%, to end at 11,630.51, snapping a four-day win streak.

    For the week, the Dow fell 0.1%, the S&P 500 gained 1.4% and the Nasdaq climbed 4.4%, according to Dow Jones Market Data. The Dow booked back-to-back weekly losses while the Nasdaq saw its biggest weekly percentage gain since January.

    What drove markets

    U.S. stocks fell Friday as worries about the banking sector persisted.

    “The markets are up and down all this week, and they’re moving typically in big amounts, because there really isn’t any consensus on how the strains in the banking system will play” into the economy, said Paul Christopher, head of global investment strategy at Wells Fargo Investment Institute, in a phone interview Friday. Investors are trying to get a sense for how quickly the economy may be slowing and whether the problems in the banking sector will lead to an “accelerated slowing,” he said.

    Concerns about the banking sector’s ability to withstand deposit flight reemerged Friday morning after SVB Financial Group
    SIVB,
    -60.41%

    announced it had filed for Chapter 11 bankruptcy protection. SVB is the holding company of Silicon Valley Bank , which was put into FDIC receivership last Friday.

    On Thursday, First Republic Bank announced that it would receive $30 billion of uninsured deposits from a group of large U.S. banks. JPMorgan Chase & Co., Citigroup Inc., Bank of America Corp. and Wells Fargo & Co. were among the 11 banks that agreed to provide the deposits.

    Meanwhile, Federal Reserve data released Thursday afternoon in New York showed banks borrowed a combined $165 billion from the central bank. Most of the borrowing occurred via the Fed’s discount window. But a small amount was also tapped through the Fed’s new Bank Term Funding Program that allows bonds trading at a discount to be used as collateral, at par value. The fact that borrowing through the discount window has soared to a record high was adding to the market’s concerns about the banking sector, analysts said.

    See: Banks have borrowed $165 billion from the Fed in past week after SVB failure

    First Republic Bank
    FRC,
    -32.80%

    shares plunged 32.8% Friday, while Credit Suisse Group
    CS,
    -6.94%
    ,
    which earlier this week got a lifeline from the Swiss National Bank, closed 6.9% lower, according to FactSet data.

    At least four major banks have put restrictions on trades that involve troubled Swiss lender Credit Suisse Group or its securities, Reuters reported Friday, citing people with direct knowledge of the matter.

    “I think there are still a lot of questions right now,” said Mark Luschini, chief investment strategist at Janney, during a phone interview with MarketWatch. “Investors can’t seem to hold their enthusiasm for equities for longer than a 24-hour news cycle.”

    It’s not hard to understand why investors are still so anxious about the banking sector given the surge in borrowing from the Fed, said Matt Maley, chief market strategist at Miller Tabak + Co.

    “Given that banks borrowed over $150bn at the Fed’s discount window on Wednesday, which compares to $4.4bn the week before, one can understand why investors are worried that the situation might be a bit more dire than the authorities are admitting to right now,” Maley said in emailed commentary.

    In economic news, the Conference Board said Friday that the U.S. leading economic index fell 0.3% in February, marking the 11th straight monthly decline. U.S. industrial production was flat in February, data released Friday by the Fed show.

    Meanwhile, the University of Michigan’s latest reading on consumer sentiment showed consumers were more downbeat in March than at ay time in the last four months.

    While stocks fell Friday, they finished the week mostly higher. The Dow Jones Industrial Average slipped 0.1% for the week, while the S&P 500 booked a 1.4% weekly gain and the technology-heavy Nasdaq Composite saw a weekly rise of 4.4%, according to Dow Jones Market Data.

    Companies in focus
    • FedEx Corp.’s stock 
      FDX,
      +7.97%

       jumped 8% after beating analyst estimates in its fiscal third-quarter earnings. The shipping firm also lifted its profit forecast for the full fiscal year.

    • Shares of PacWest Bancorp 
      PACW,
      -18.95%

      and Western Alliance Bancorp 
      WAL,
      -15.14%

      tumbled as regional banks continued to face pressure, with PacWest falling almost 19% and Western Alliance dropping 15.1%.

    • Shares of Microsoft Corp.
      MSFT,
      +1.17%

      rose 1.2% as analysts saw the latest iteration of Chat GPT giving the tech giant an even greater edge. In other megacap tech names, Alphabet Inc.’s Class A
      GOOGL,
      +1.30%

      shares gained 1.3% while semiconductor giant Nvidia Corp.
      NVDA,
      +0.72%

      advanced 0.7%.

    —Steve Goldstein contributed to this report.

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  • CNBC Daily Open: After First Republic rescue, the banking crisis looks contained (again)

    CNBC Daily Open: After First Republic rescue, the banking crisis looks contained (again)

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    A sign is posted on the exterior of a First Republic Bank office on March 16, 2023 in San Francisco, California.

    Justin Sullivan | Getty Images News | Getty Images

    This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

    The banking crisis seems contained for now … again.

    What you need to know today

    • Smaller banks might be left out of efforts to protect the banking system. U.S. Treasury Secretary Janet Yellen said only banks that “would create systemic risk and significant economic and financial consequences” would have their uninsured deposits protected.
    • PRO Markets expect the Federal Reserve to raise interest rates by a quarter percentage point next week. But there’s a chance the central bank might pause hikes.

    The bottom line

    At the risk of jinxing the situation, the banking crisis, which has now spread from the U.S. to Europe, appears contained (again).

    That’s thanks to the extraordinary number of measures that financial regulators and central banks on both sides of the Atlantic have used to shore up confidence. And those are not just empty promises. For instance, four days after the Fed introduced the Bank Term Funding Program — which lends banks money for a year in exchange for high-quality collateral — financial institutions have already borrowed $11.9 billion from the program. Whether that number exposes material weakness in banks’ balance sheets is not really the point. The important thing is consumers and investors are psychologically reassured.

    Wall Street was cheered by the rapid response to the banking crisis. The Dow Jones Industrial Average rose 1.17%, the S&P 500 increased 1.76% and the Nasdaq surprised by jumping 2.48% — technology stocks had a very good Thursday. Alphabet rallied 4.38%, Amazon added 3.99% and Microsoft rose 4.05%. Microsoft rallied after the company announced it would be adding artificial intelligence features, named Copilot, to apps like Word, Powerpoint and Excel. But the other tech giants probably rose because investors were betting — now that there’s evidence that something’s breaking in the economy — that the Fed might not be as aggressive in hiking rates. That would benefit tech firms the most.

    It would also benefit the overall economy, which according to Goldman Sachs has a 35% chance of entering a recession in the coming 12 months — up from 25% before the banking crisis happened. The Fed’s two mandates, to stabilize the economy and to fight inflation, are looking increasingly at odds with each other. It won’t be an easy job.

    Subscribe here to get this report sent directly to your inbox each morning before markets open.

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  • Microsoft inks Xbox game deal with Boosteroid cloud service

    Microsoft inks Xbox game deal with Boosteroid cloud service

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    Microsoft said Tuesday that it has struck a deal to make Xbox PC video games available on the Boosteroid cloud gaming platform, its latest move to appease antitrust regulators scrutinizing its purchase of game maker Activision Blizzard.

    The U.S. tech giant said the 10-year agreement would also include Activision Blizzard titles like the popular Call of Duty franchise if or when the acquisition gets approved.

    Microsoft has been announcing new partnerships as it tries to persuade regulators in the U.S. and Europe to allow the $69 billion all-cash transaction to go through.

    In recent months, Microsoft has signed similar agreements with Nintendo, Nvidia and Steam as it battles stiff opposition from Sony, which makes the rival PlayStation console and fears losing access to Call of Duty and Activision’s other hit games.

    The agreement makes “more clear to regulators that our acquisition of Activision Blizzard will make ‘Call of Duty’ available on far more devices than before,” Microsoft President Brad Smith said.

    Boosteroid, which has 4 million users and a software development team based in Ukraine, is billed as the world’s biggest independent cloud gaming provider.

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  • As tech gets hit again, strategists say these stocks present a buying opportunity

    As tech gets hit again, strategists say these stocks present a buying opportunity

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  • CNBC Daily Open: The Nasdaq popped last week. But tech might be in trouble

    CNBC Daily Open: The Nasdaq popped last week. But tech might be in trouble

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    People walk near the Google offices on July 04, 2022 in New York City.

    John Smith | View Press | Getty Images

    This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

    The Nasdaq outpaced other indexes last week. But not all is rosy in tech.

    What you need to know today

    • Bard, Google’s artificial intelligence engine, is “not search,” Jack Krawczyk, the product lead for Bard told Google employees. Bard’s magic, instead, is more a “creative companion.” Employees told CNBC they’re confused by Google’s sudden pivot.
    • PRO This week, Federal Reserve Chair Jerome Powell will speak about the economy before Senate committees, and the February employment report will come out. Economists expect one of those to be a major market mover; the other, not so much.

    The bottom line

    Helped by Fed official Raphael Bostic’s dovish comments and a retreat in Treasury yields, U.S. stocks managed to shrug off their pessimism and rallied to end the week in the green.

    The Dow Jones Industrial Average rose 1.17%, giving it a 1.75% weekly gain that broke its four-week losing streak. The S&P 500 gained 1.61%, a 1.9% weekly increase on the week. The tech-heavy Nasdaq Composite climbed 1.97%, ending the week 2.58% higher. That makes two straight months that the Nasdaq has outpaced the other indexes.

    Not that all is rosy in the tech industry. Amazon stopped building “HQ2.” Meanwhile, Meta’s throwing more money at its loss-incurring Reality Labs segment. The firm slashed the cost of its virtual reality headsets — by up to $500 on its higher-end Meta Quest Pro — in an attempt, perhaps, to boost sales.

    Not all is well in the much-vaunted realm of the artificial intelligence chatbots, either. Google abruptly pivoted from its search-first strategy to position Bard as more of a companion to “explore your curiosity,” Krawcyzk told employees, which left them scratching their heads.

    Maybe it’s just really hard to integrate unpredictable AI chatbots with something as fact-based as web search. Recall the fiasco surrounding Microsoft’s AI chatbot Bing, which threatened users and professed its love to them. (To Bing’s credit, that’s remarkably human behavior.)

    Despite the Nasdaq’s stellar showing so far this year, then, it remains to be seen if the promises of tech match reality — and translate into further gains for the index. Companies should be careful not to dither too long: In today’s high interest rate environment, investors don’t have as much patience as they did a few years ago.

    Subscribe here to get this report sent directly to your inbox each morning before markets open.

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  • Google execs tell employees in testy all-hands meeting that Bard A.I. isn’t just about search

    Google execs tell employees in testy all-hands meeting that Bard A.I. isn’t just about search

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    Sundar Pichai, chief executive officer of Google Inc., speaks during the Google I/O Developers Conference in Mountain View, California, U.S., on Tuesday, May 8, 2018.

    David Paul Morris | Bloomberg | Getty Images

    Google executives are continuing to deal with the fallout from last month’s fumbled announcement of the company’s artificial intelligence engine called Bard, but their efforts to clean up the mess are causing further confusion among the workforce.

    In an all-hands meeting on Thursday, executives answered questions from Dory, the company’s internal forum, with most of the top-rated issues related to the priorities around Bard, according to audio obtained by CNBC. It’s the first companywide meeting since Google employees criticized leadership, most notably CEO Sundar Pichai, for the way it handled the announcement of Bard, Google’s ChatGPT competitor.

    Wall Street has punished Google parent Alphabet for the Bard rollout, pushing the stock lower on concern that the company’s core search engine is at risk of getting displaced as consumers eventually turn to AI-powered responses that allow for more conversational and creative answers. Staffers called Google’s initial public presentation “rushed,” “botched” and “un-Googley.”

    Jack Krawczyk, the product lead for Bard, made his all-hands debut on Thursday, and answered the following question from Dory, which was viewed by CNBC.

    “Bard and ChatGPT are large language models, not knowledge models. They are great at generating human-sounding text, they are not good at ensuring their text is fact-based. Why do we think the big first application should be Search, which at its heart is about finding true information?”

    Krawczyk responded by immediately saying, “I just want to be very clear: Bard is not search.”

    “It’s an experiment that’s a collaborative AI service that we talked about,” Krawczyk said. “The magic that we’re finding in using the product is really around being this creative companion to helping you be the sparkplug for imagination, explore your curiosity, etc.”

    But Krawczyk was quick to follow up by saying, “we can’t stop users from trying to use it like search.”

    He said Google is still catering to people who want to use it for search, indicating that the company has built a new feature for internal use called “Search It.”

    “We’re going to be trying to get better at generating the queries associated there, as well as relaying to users our confidence,” Krawczyk said. He added that users will see a tab that says “view other drafts,” which would point people away from search-like results.

    “But as you want to get into more of the search-oriented journeys, we already have a product for that — it’s called search,” he said.

    The attempt to separate Bard from search appeared to signify a pivot in the initial strategy, based on what employees told CNBC and on internal memes that circulated in recent weeks. In the lead up to the Bard announcement, Google executives repeatedly said the technology it was developing internally would integrate with search.

    Several Google employees, who asked not to be named because they weren’t authorized to speak on the matter, told CNBC that the inconsistent answers from executives has led to greater confusion.

    Elizabeth Reid, vice president of engineering for search, echoed Krawczyk’s comments on Thursday, focusing on the company’s extensive use of large language models (LLMs).

    “As Jack said, Bard is really separate from search,” Reid said. “We do have a pretty long history of bringing LLMs into search,” she said, citing models named Bert and Mum.

    But while the company experiments with LLMs, it wants to “keep the heart of what search is,” Reid said.

    In Google’s announcement last month, it mentioned search several times.

    “We’re working to bring these latest AI advancements into our products, starting with Search,” the company said in a blog post

    That same week, at an event in Paris, Google search boss Prabhakar Raghavan unveiled some fresh examples of using Bard within search. And following the announcement, company leaders urged all employees to help by spending a few hours testing Bard and rewriting wrong answers, citing a “great responsibility to get it right.”

    CNBC also previously reported the company was testing various Bard-integrated home search page designs.

    Another top-rated question Thursday asked Pichai for different use cases for Bard, since Google employees were asked to help on search and “to rewrite queries with factual information.”

    “It’s important to acknowledge that it’s experimental,” Pichai said in his response. “It’s super important to acknowledge the limitations of these products as well.” Those limits are something he’s addressed in the past.

    Pichai said that with Bard, “you are exposing the ability for users to converse with LLMs,” which will improve over time. “And obviously we are product engineering on top of it,” he said.

    “Products like this get better the more the people who use them,” Pichai said. “It’s a virtuous cycle.”

    ‘It’s an intense time’

    Following Google’s launch of Bard in February, Alphabet’s stock price dropped almost 9%, suggesting that investors were hoping for more in light of growing competition from Microsoft, which is a large investor in ChatGPT creator OpenAI.

    Employees are well aware of how the introduction was received.

    “The first public demo was demoralizing, sent our stock into a nosedive, and invited massive media coverage,” read an employee comment from Dory that was read aloud. Then came the question, “What really happened?” and the request to “please share your candid thoughts on what went wrong at the Bard launch.”

    Pichai referred the answer Krawczyk, who danced around the subject without giving a direct answer.

    “Questions like this can be fair and we want to reiterate the fact that Bard has not launched,” Krawczyk said. “We acknowledged to the world that this is something that we’re experimenting with — we’re testing it. But there’s a lot of excitement in the industry right now.”

    Krawczyk also referenced an event held at Microsoft’s headquarters that week, in which the company showed off how OpenAI’s technology can power Bing search results and other products.

    “You see the stories of ChatGPT coincides with an event that we’re having that was actually focused on search,” Krawczyk said. “There can be challenges around the external perception but, as you heard today, we continue to focus on Bard’s testing.”

    Krawczyk added that Google is excited to get the technology in “users’ hands to capture their creativity.”

    Pichai chimed in to say, “It’s an intense time.”

    “The purpose of the blog post was once we decided we were going to external trusted testers, things could leak and it was important we positioned it,” Pichai said. “We haven’t launched the product yet. And obviously when we launch, we’ll make clear it’s an experimental product.”

    Pichai said that the company hopes to provide more details after Google IO, the annual developer conference. Google has yet to announce dates for the event.

    Another top-rated employee comment from Dory said, “Launching AI seems like a knee-jerk reaction without a strategy.”

    Pichai began his response by noting that Google spends more money on AI research and development than any other company.

    “I disagree with the premise of this question” he said, letting out a laugh. “We are deeply working on AI for a long time. You are right in the sense that, we have to stay focused on users and make sure we are building things which are impactful.” He said, “user input is going to be an important part of the process so it’s important to get it right.”

    Jeff Dean, head of artificial intelligence at Google LLC, speaks during a Google AI event in San Francisco, California, U.S., on Tuesday, Jan. 28, 2020.

    David Paul Morris | Bloomberg | Getty Images

    Jeff Dean, Google’s AI chief, was called upon by Pichai at the all-hands meeting to answer a question regarding the company’s loss of top talent. Specifically, the question asked why Google lost so many key people who were listed on a paper about prominent architecture used for AI.

    “I think it’s important to realize this is a super-competitive field,” Dean said. “People with these kinds of skills are in high demand.”

    Dean said Google has “two of the best AI research teams in the world” and “people working side by side on pushing forward the state of art in AI.”

    Despite the competition in the market, “we have the ability to get things out in papers here but also work on products that touch on millions of users every day,” Dean said.

    Pichai added that, “Just over the last couple of weeks, we are talking to some people who want to join Google who are literally some of the best ML researchers and engineers on the planet.”

    A Google spokesperson didn’t immediately respond to a request for comment.

    WATCH: Google could have a second-mover advantage with its chatbot tech

    Google could have a second-mover advantage with its chatbot tech, says Big Technology's Alex Kantrowitz

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  • Here’s why 7 Club stocks, including Nvidia and Meta, beat the market in January and February, defying this year’s seesaw start

    Here’s why 7 Club stocks, including Nvidia and Meta, beat the market in January and February, defying this year’s seesaw start

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    Jensen Huang, president and CEO of Nvidia, speaks during the company’s event at the 2019 Consumer Electronics Show in Las Vegas on Jan. 6, 2019.

    David Paul Morris | Bloomberg | Getty Images

    This year has, so far, been something of a Jekyll and Hyde market for equities.

    January’s strength was a welcome reprieve from the brutality that was 2022. February’s stumble has reminded us that sticky inflation remains a challenge for both the broader economy and stocks.

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  • ‘Without a doubt our favorite mega cap’: Investor names the stock to buy for the next 10 years

    ‘Without a doubt our favorite mega cap’: Investor names the stock to buy for the next 10 years

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  • China tech companies are closely watching ChatGPT’s A.I. skills. Here’s what they’re doing about it

    China tech companies are closely watching ChatGPT’s A.I. skills. Here’s what they’re doing about it

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    A display at the World Artificial Intelligence Conference (WAIC) in Shanghai, China, on Friday, Sept. 2, 2022.

    Bloomberg | Bloomberg | Getty Images

    BEIJING — The business story of ChatGPT right now is more about what isn’t known.

    Big tech companies in the U.S. and China rushed this month to announce they are working on similar AI tools. Their announcements often referenced Microsoft-backed ChatGPT, while disclosing few details on what they themselves were working on.

    The artificial intelligence-powered chatbot ChatGPT has taken the tech world by storm in the last few months with its ability to generate everything from poems to business strategies in a human-like conversation.

    Still, analysts say the tech is transformative, something that’s also been said about blockchain and the metaverse.

    Competitive landscape

    Here’s what companies — including those in China — are doing in this specialized area of AI:

    U.S. startup OpenAI raced to beat rivals by launching ChatGPT in November, according to The New York Times, citing sources. The public interface skyrocketed in popularity for everything from homework help to strategy development.

    OpenAI did not respond to a request for comment.

    ChatGPT for business software

    Database software startup PingCap already has a ChatGPT-based product on the market. The company has offices in Beijing and San Mateo, California.

    PingCap launched “Chat2Query” for customers outside China in January that uses a publicly available application programming interface from OpenAI.

    The product lets clients analyze in seconds their companies’ operating data — such as best-selling car models — without needing to know a computer programming language, said Liu Song, vice president of PingCap. He said Chat2Query is free for clients processing up to 5 gigabytes of data.

    “We think the revolution may not be in AI search but in every business,” he said in Mandarin, translated by CNBC. However, he noted that those data need to be organized in a standardized way.

    We think the revolution may not be in AI search but in every business

    Liu Song

    PingCap, vice president

    Baidu, the Chinese search engine and tech giant, said Wednesday its AI chatbot project will be embedded into search first, and opened to the public in March.

    The product is named “Ernie bot” in English or “Wenxin Yiyan” in Chinese, the company said previously.

    While little is known about Ernie bot’s capabilities — and how they compare with ChatGPT’s — Baidu-backed video streaming platform iQiyi has announced plans for connecting to the bot for search and AI-generated content. Baidu-backed electric car startup Jidu — which hasn’t started delivering cars yet — also said it plans to incorporate Ernie bot.

    Alibaba is scheduled to release quarterly earnings on Thursday evening. The Chinese e-commerce and cloud giant said it is internally testing ChatGPT-style technology, and did not provide a timeline for launch. However, Alibaba said it has been working on related AI tech since 2017.

    Chinese e-commerce rival JD.com did not have a launch date either, but said its “ChatJD” will focus on retail and finance. It will assist with tasks such as generating product summaries on shopping sites and financial analysis, the company said.

    Tencent, which operates the ubiquitous Chinese messaging app WeChat, said in a statement it continues to research natural language processing. That’s the field within artificial intelligence on which ChatGPT is based.

    While ChatGPT this month became a trendy topic in China, even for state media, analysts note the country’s censorship and data regulations may affect how similar tech develops in the country. Beijing has emphasized building up its own technological abilities.

    Nikkei Asia on Wednesday reported, citing sources, that regulators told Tencent and Alibaba-affiliate Ant Group not to offer access to ChatGPT services on their platforms, either directly or via third parties.

    The report did not specify which regulators. China’s cybersecurity regulator, Tencent and Ant did not immediately respond to requests for comment.

    In terms of technical ability, however, the U.S. is only months — not years — ahead of China in that AI research, a Microsoft executive told journalists this month. ChatGPT isn’t available in China, although Microsoft operates in the country.

    The executive said that state-backed Beijing Academy of Artificial Intelligence is one of three global leaders in artificial intelligence research, along with Google’s DeepMind and Microsoft’s partnership with OpenAI.

    A.I. creative content

    Kunlun Tech expects to release an open source Chinese version of ChatGPT, as early as the middle of this year, its president Han Fang told CNBC last week. Open source software is available to the public and allows anyone to see, change or distribute the code.

    The company, which generates most of its revenue outside China, previously said its niche web browser Opera is planning to incorporate ChatGPT into its products, although it’s unclear when or with what functions.

    Kunlun Tech is already working in the field of AI-generated content, such as music.

    Fang said his commercialization plan is to first develop those AI tools. Creators can then use the tools to make their own work and publish them on designated platforms for public viewing, following which the company can then sell ads, he said. He expects to launch the platforms later this year.

    Transformative potential

    Fang said he was directly inspired by OpenAI’s early version of ChatGPT tech in 2020.

    “We all talk about the metaverse, but who is in it?” he said in Mandarin, translated by CNBC. “It only changed our news. It didn’t change our lives.”

    In contrast, he said generative AI tech can immediately provide value since it operates where users are already producing and consuming content. Generative AI can also lower production costs, allowing animators and speakers of minority languages to easily create their own content, Fang said.

    Why ChatGPT is a game changer for AI

    The implications for jobs and industries remain significant.

    The arrival of AI such as ChatGPT means many “cognitive tasks” look easier to automate than manual work such as in factories — a surprise to many economists, said Anton Korinek, professor at the Department of Economics and Darden School of Business, University of Virginia.

    “The impressive but also little bit scary part is that the power of these systems has been progressing steadily over the past couple of years,” he said, adding that he expects more powerful AI tech this year alone.

    “That will really imply that these models will have a revolutionary impact on our economy, on productivity, on labor markets and ultimately on society in general.”

    — CNBC’s Arjun Kharpal and Lauren Feiner contributed to this report.

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  • Microsoft makes case for Activision merger amid EU scrutiny

    Microsoft makes case for Activision merger amid EU scrutiny

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    BRUSSELS (AP) — Microsoft’s Xbox video game division on Tuesday announced new partnerships with Nintendo and chipmaker Nvidia as it tries to persuade European regulators to approve its planned $68.7 billion takeover of game publishing giant Activision Blizzard.

    A key audience for the announcements were the European Union antitrust regulators who held a closed-door meeting Tuesday with executives from Microsoft and some of its competitors, including Sony and Google.

    Microsoft announced a 10-year agreement with chipmaker Nvidia to bring Xbox games to Nvidia’s cloud gaming service. Microsoft also said it has now signed a similar deal with Nintendo, formalizing a commitment it revealed late last year.

    What it does not have is an agreement with Xbox’s chief rival, PlayStation-maker Sony, which has sought to convince antitrust regulators around the world to stop the Activision Blizzard merger.

    The all-cash deal, which is set to be the largest in the history of the tech industry, faces pushback from regulators in the U.S. and Europe because it would give Microsoft control of popular game franchises such as Call of Duty, World of Warcraft and Candy Crush.

    The European Commission, the 27-nation bloc’s executive arm, has been investigating whether the merger would distort fair competition to popular Activision Blizzard game titles. It’s scheduled to make a decision by March 23.

    Microsoft first announced the agreement to buy the California-based game publisher early last year, but the takeover has also been stalled in the U.S., where the Federal Trade Commission has sued to block the deal, and in Britain, where an antitrust watchdog’s provisional report said it will stifle competition and hurt gamers.

    Microsoft, which is based in Redmond, Washington, has been counting on getting approval in either the EU or Britain to help advance its case in the U.S.

    Microsoft’s president, Brad Smith, said at a Brussels news conference after meeting with regulators Tuesday that he was “not in a position to say exactly what was said in the hearing room” but emphasized that Xbox has a much smaller share of the market than PlayStation does in Europe, and asserted that the deal would be good for the industry by bringing more games to more people.

    “For us at Microsoft, this has never been about spending $69 billion so that we could acquire titles like Call of Duty and make them less available to people,” Smith said. “That’s actually not a great way to turn a $69 billion asset into something that will become more valuable over time.”

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