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Tag: MSFT

  • Dow posts longest winning streak in nearly 6 years; Nasdaq slumps over 2%

    Dow posts longest winning streak in nearly 6 years; Nasdaq slumps over 2%

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    U.S. stocks finished mostly lower Thursday, with the Nasdaq and S&P 500 dragged down by disappointing earnings, while the Dow Jones Industrial Average rose for a ninth straight day for its longest winning streak in nearly six years.

    How stocks traded

    • The S&P 500
      SPX,
      -0.68%
      fell 30.85 points, or 0.7%, to close at 4,534.87.

    • The Dow
      DJIA,
      +0.47%
      rose 163.97 points, or 0.5%, to finish at 35,225.18. The winning streak is its longest since a nine-day run that ended on Sept. 20, 2017, according to Dow Jones Market Data.

    • The Nasdaq Composite
      COMP,
      -2.05%
      ended at 14,063.31, down 294.71 points, or 2.1%.

    What drove markets

    After lagging behind the S&P 500 and Nasdaq for most of the year, the Dow Jones Industrial Average has climbed over the past two weeks. The blue-chip gauge is now heading for its longest streak of daily gains since Sept. 20, 2017, according to Dow Jones Market Data.

    It’s the latest milestone as value stocks and other lagging sectors of the market appear to be playing “catch up,” said Paul Nolte, senior wealth adviser and market strategist at Murphy & Sylvest Wealth Management, during a phone interview with MarketWatch. Although the Dow’s year-to-date gains are still well behind those of the S&P 500, with the blue-chip gauge up 6.6% since Jan. 1, FactSet data show.

    On Wednesday, the S&P 500 and Nasdaq closed at their highest levels in nearly 16 months.

    “We’re finally seeing the rotation to value,” he said. “The Dow is playing catch up with the S&P 500 and the Nasdaq.”

    See: Stock-market bubble trouble? Check out the 3-year view on Nasdaq, S&P 500 returns.

    Technology stocks were lagging following earnings from Netflix Inc.
    NFLX,
    -8.41%
    released late Wednesday, which showed that revenue fell short. Shares fell 8.4%.

    Tesla Inc.
    TSLA,
    -9.74%
    shares fell 9.7% after the electric vehicle maker beat Wall Street expectations for its second quarter but not in the blowout fashion that some market observers were expecting.

    “Netflix missed sales estimates and issued lower-than-expected Q3 guidance, while Tesla’s results showed shrinking profitability with squeeze on margins,” said Henry Allen, strategist at Deutsche Bank.

    Semiconductor shares also took it on the chin, with the PHLX Semiconductor Index
    SOX,
    -3.62%
    falling 3.6%. The drop came after Taiwan Semiconductor Manufacturing Co. 
    TSM,
    -5.05%
    topped second-quarter earnings expectations but reported margins that contracted, while providing a somewhat downbeat outlook.

    Meanwhile, shares of IBM Corp.
    IBM,
    +2.14%
    and Johnson & Johnson
    JNJ,
    +6.07%
    drove the Dow higher after both companies beat earnings expectations.

    Bad news for Netflix seemed to infect other megacap technology names, as Alphabet Inc. Class A
    GOOGL,
    -2.32%
    and Alphabet Inc.
    GOOG,
    -2.65%
    retreated, as did shares of Apple Inc.
    AAPL,
    -1.01%
    and Microsoft Corp.
    MSFT,
    -2.31%
    after the latter hit a record this week.

    Investors also digested earnings from American Airlines Group Inc.
    AAL,
    -6.24%
    and Blackstone Inc.
    BX,
    -0.61%
    which reported before the opening bell. After the close, investors will hear from Capital One Financial Corp.
    COF,
    -2.52%    ,
    CSX Corp.
    CSX,
    -0.27%
    and First Financial Bancorp
    FFBC,
    -0.54%    ,
    along with a few others.

    In U.S. economic data, weekly jobless benefit claims data showed the number of Americans applying for first-time unemployment benefits fell to a two-month low. Meanwhile, the Philadelphia Fed’s gauge of manufacturing activity came in at negative 13.5 in July, up from 13.7 during the prior month.

    Existing home sales fell in June, while leading index of economic indicators dropped 0.7% in June, falling for the 15th month in a row.

    Companies in focus

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  • U.S. stocks finish higher as Dow industrials book longest winning streak since March 2021 after better-than-expected corporate earnings

    U.S. stocks finish higher as Dow industrials book longest winning streak since March 2021 after better-than-expected corporate earnings

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    U.S. stock indexes ended higher on Tuesday with the Dow Jones Industrial Average settling at the highest level in 15 months after quarterly results from Bank of America Corp.
    BAC,
    +4.42%
    and Morgan Stanley
    MS,
    +6.45%
    bolstered bank stocks, while shares of Microsoft Corp.
    MSFT,
    +3.98%
    spiked to its record high, buoying the technology sector. The Dow industrials
    DJIA,
    +1.06%
    advanced 366 points, or 1.1%, to end at 34,951, its highest closing level since April 21, 2022. The S&P 500
    SPX,
    +0.71%
    was up 0.7%, while the Nasdaq Composite
    COMP,
    +0.76%
    jumped 0.8%. Bank of America Corp.’s second-quarter earnings beat Wall Street expectations, sending the megabank’s stock up by more than 4.4% on Tuesday, while Morgan Stanley’s shares rallied 6.5% after its quarterly profit dropped but beat analyst expectations. Exchange-traded funds that buy bank stocks jumped on Tuesday with the SPDR S&P Regional Banking ETF
    KRE,
    +4.22%
    logging its best daily performance since June 6, according to FactSet data.

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  • Federal appeals court denies FTC bid to pause Microsoft-Activision deal

    Federal appeals court denies FTC bid to pause Microsoft-Activision deal

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    A federal appeals court late Friday denied the Federal Trade Commission’s bid to temporarily block Microsoft Corp.’s
    MSFT,
    +0.75%
    $68.7 billion acquisition of videogame publisher Activision Blizzard Inc.
    ATVI,
    +0.59%    ,
    clearing the path for the biggest gaming deal in the U.S. The 9th Circuit U.S. Court of Appeals ruling means only U.K. regulators can stop the closing of the deal before a July 18 deadline. On Tuesday, a federal judge in San Francisco ruled against the FTC, which sued to block the deal in December, prompting the FTC’s appeal on Wednesday. “We appreciate the Ninth Circuit’s swift response denying the FTC’s motion to further delay the deal. This brings us another step closer to the finish line in this marathon of global regulatory reviews,” Microsoft President Brad Smith said in a statement. The FTC was not immediately available for comment.

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  • Microsoft Stock Is a Buy, American Tower Can Climb, and More Analyst Reports

    Microsoft Stock Is a Buy, American Tower Can Climb, and More Analyst Reports

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    These reports, excerpted and edited by Barron’s, were issued recently by investment and research firms. The reports are a sampling of analysts’ thinking; they should not be considered the views or recommendations of Barron’s. Some of the reports’ issuers have provided, or hope to provide, investment-banking or other services to the companies being analyzed.

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  • FTC files appeal, again seeks to block Microsoft-Activision deal

    FTC files appeal, again seeks to block Microsoft-Activision deal

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    The Federal Trade Commission on Thursday asked an appeals court to temporarily block Microsoft Corp.’s $69 billion acquisition of Activision Blizzard Inc. while it challenges a ruling earlier this week green-lighting the deal.

    The FTC on Thursday asked U.S. District Judge Jacqueline Scott Corley to postpone her ruling — which she promptly denied — and also appealed to the Ninth U.S. Circuit Court of Appeals in San Francisco to pause the acquisition “to preserve the status quo” while the case is reviewed, claiming it is likely to succeed in its appeal.

    According to the filing, the FTC claims the judge applied the wrong legal standard to its request for a preliminary injunction, and erred in a number of other matters.

    The deal is set to close in the coming days, and letting it happen will “irreparably harm the public interest and the FTC,” regulators said.

    Also see: GOP blasts FTC Chair Khan as a ‘bully’ after agency’s loss in Microsoft case

    In a response filed with the court, Microsoft said the FTC “failed to carry its burden on independent, fact-based grounds” and “dragged its heels” before appealing.

    “The court has already found that it would be inequitable” to order an injunction that could lead to “the potential scuttling of the merger,” Microsoft said, in asking for the FTC’s request to be denied.

    The FTC has claimed the tie-up of a major videogame platform — Microsoft’s
    MSFT,
    +1.62%
     Xbox — with a major videogame publisher — Activision
    ATVI,
    -0.51%
     makes the wildly popular “Call of Duty,” among other titles — would be harmful to the videogame industry and consumers.

    Microsoft has pledged to keep “Call of Duty” available to Sony’s
    SONY,
    +2.82%
     PlayStation console for 10 years, and will make it available for Nintendo’s 
    7974,
    -0.36%
     Switch and some cloud-gaming platforms.

    In her ruling clearing the deal Tuesday, Corley said the FTC did not show “this particular vertical merger in this specific industry may substantially lessen competition.”

    Bloomberg News reported late Thursday that Microsoft and Activision are considering giving up some control of their cloud-gaming business in the U.K. to win approval of British regulators, who — if the U.S. appeals court does not act — are the final hurdle to the deal closing on time.

    FTC Chair Lina Khan testified on Capitol Hill on Thursday, where Republican lawmakers assailed her actions and sharply criticized her agency’s court losses in trying to block the Microsoft-Activision deal and Meta’s
    META,
    +1.32%
    acquisition of a virtual-reality gaming company earlier this year.

    Read more: After Microsoft defeat, ‘toothless’ FTC needs to pick better battles if it wants to rein in Big Tech

    Also: FTC’s probe of OpenAI marks key moment in Khan’s push to rein in Big Tech

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  • FTC will appeal judge’s ruling clearing Microsoft-Activision deal

    FTC will appeal judge’s ruling clearing Microsoft-Activision deal

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    The Federal Trade Commission late Wednesday filed notice that it will appeal a judge’s ruling this week that gave Microsoft Corp. the green light to proceed with its $69 billion acquisition of Activision Blizzard Inc.

    In a filing with the Ninth Circuit Court of Appeals in San Francisco, the FTC is seeking to overturn U.S. District Judge Jacqueline Scott Corley’s ruling Tuesday, which said the deal would not hurt competition.

    “The District Court’s ruling makes crystal clear that this acquisition is good for both competition and consumers,” Brad Smith, Microsoft’s vice chair and president, said in a statement.” We’re disappointed that the FTC is continuing to pursue what has become a demonstrably weak case, and we will oppose further efforts to delay the ability to move forward.” 

    The FTC has claimed the tie-up of a major videogame platform — Microsoft’s
    MSFT,
    +1.42%
    Xbox — with a major videogame publisher — Activision
    ATVI,
    -1.09%
    makes the wildly popular “Call of Duty,” among other titles — would be harmful to the videogame industry and consumers.

    “The facts haven’t changed,” an Activision spokesperson said Wednesday. “We’re confident the U.S. will remain among the 39 countries where the merger can close. We look forward to reinforcing the strength of our case in court, again.”

    Microsoft has pledged to keep “Call of Duty” available to Sony’s
    SONY,
    +1.78%
    PlayStation console for 10 years, and will make it available for Nintendo’s
    7974,
    +1.63%
    Switch and some cloud-gaming platforms.

    The deal faces a July 18 deadline, and still must gain regulatory approval in the U.K.

    Tuesday’s ruling was yet another antitrust setback for the FTC, which has failed to do much to rein in Big Tech, and one analyst told MarketWatch on Tuesday that the regulators need to do ” a much better job of picking their battles,”

    Read more: After Microsoft defeat, ‘toothless’ FTC needs to pick better battles if it wants to rein in Big Tech

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  • Nasdaq is making a big change to its most popular index. Here’s how it might impact your portfolio.

    Nasdaq is making a big change to its most popular index. Here’s how it might impact your portfolio.

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    Big Tech has gotten too big for Nasdaq’s liking.

    So the exchange has decided to make some changes to the Nasdaq 100 index, its most popular index, according to company representatives, ostensibly to diminish the concentration risk that accompanies having an index that derives more than half of its value from just seven companies.

    Nasdaq announced late last week that the Nasdaq 100
    NDX,
    +1.24%
    will undergo a special rebalancing that will take effect prior to the market open on July 24. It’s only the third time that Nasdaq has announced such an impromptu rejiggering of how much individual stocks contribute to the index. Although Nasdaq can also reconstitute the index regularly every December, and there’s also a mechanism to rebalance every quarter as well.

    In a statement announcing the move, the exchange alluded to the fact that the largest companies in the technology sector have too much sway over the index’s price. Nasdaq said special rebalancing can be implemented “to address overconcentration in the index by redistributing the weights.”

    The rebalancing comes at a critical time. The Nasdaq 100 has risen 40% since the start of 2023, largely thanks to the “Magnificent Seven,” a handful of megacap technology names that have powered much of the U.S. stock market’s rally this year.

    These gains have pushed the index to its highest level since mid-January 2022, meaning that Big Tech has now retraced nearly all of last year’s losses, and might soon be headed for the all-time highs from November 2021.

    As of Thursday, the Magnificent Seven stocks — Nvidia Corp.
    NVDA,
    +3.53%    ,
    Apple Inc.
    AAPL,
    +0.90%    ,
    Microsoft Corp.
    MSFT,
    +1.42%    ,
    Amazon.com Inc.
    AMZN,
    +1.57%    ,
    Tesla Inc.
    TSLA,
    +0.82%    ,
    Meta Platforms Inc.
    META,
    +3.70%
    and Alphabet Inc.’s Class A
    GOOGL,
    +1.53%
    and Class C
    GOOG,
    +1.62%
    shares — accounted for 55% of the Nasdaq 100’s market capitalization, while the top five names account for more than 45%.

    According to Nasdaq’s official methodology, the goal is to keep the aggregate weighting of the biggest stocks below 40%. In fact, it’s possible that Tesla Inc. surpassing 4.5% of the index earlier this month triggered the Nasdaq’s rebalancing announcement, according to analysts from UBS Group AG
    UBS,
    +1.87%    .

    Exactly how it plans to accomplish this isn’t yet known. Nasdaq said the new weighting scheme will be unveiled on Friday, likely after the U.S. market close. But the UBS team has an educated guess.

    “The quarterly reviews would dictate that the aggregate weight to securities exceeding 4.5% be set to 40%. If that’s the approach Nasdaq takes, then we’d expect the weights of Microsoft, Apple, Nvidia, Alphabet, Amazon, and Tesla to be reduced,” the team said in a note shared with MarketWatch.

    For investors trying to anticipate how this might impact their portfolios, here the answers to a few key questions.

    Could the rebalancing kill the U.S. stock market rally?

    Not likely. Or rather: if the rally in Big Tech does falter, history suggests it won’t be because of the rebalancing.

    Here’s more on that from Nicholas Colas, co-founder of DataTrek Research, who discussed the topic in commentary emailed to MarketWatch on Wednesday.

    “…[T]here is the natural inclination to think that the upcoming special reweighting is a sign that large cap disruptive tech is set to roll over because a handful of names have so handily outpaced the rest of its notional peers,” Colas said.

    “History suggests otherwise. The last 2 one-off reweights were in 2011 and 1998. Neither proved to be the end of a Nasdaq 100/tech stock bull market. Not even close, really.”

    More immediately, ETF experts expect trading around the rebalancing will be relatively muted.

    “While it sounds scary, Investors are well positioned — this has been well bantered about,” said David Lutz, head of ETF Trading at Jones Trading, in comments emailed to MarketWatch.

    How could this benefit investors?

    Since megacap technology stocks don’t pay much, if anything, in dividends, the rebalancing could increase the amount of dividends that ETF investors receive each year, according to a team of analysts at JPMorgan Chase & Co.

    Since the largest constituents pay a dividend yield well below the index average, the redistribution of weight from them to the rest of the index will result in a “meaningful boost” to the regular payouts received by investors, which will boost the total return of Nasdaq 100-tracking ETFs and mutual funds.

    Will there be any short-term costs associated with the rebalancing?

    There might be. Since the new index weightings will be announced in advance, investors will have plenty of time to front-run the rebalancing trade.

    Still, there are plenty of hedge funds and proprietary trading firms that run strategies explicitly designed to profit from rebalancing. These firms profits have to come from somewhere, and the logical place would be the fund managers of the Invesco QQQ exchange-traded fund
    QQQ,
    +1.26%

    QQQM,
    +1.27%    .

    “There are prop traders and hedge funds that run the strategy of providing liquidity to indexes with the expectation that they’ll earn profits,” said Roni Israelov, president and CIO at Wealth Manager NDVR, during a phone interview with MarketWatch.

    “if they are earning profits by providing that liquidity, the expectation is those profits are being paid by investors in those funds.”

    So far at least, markets appear to have taken news of the rebalancing in stride. Megacap technology names tumbled earlier this week, but they’ve since recouped those losses and then some.

    The Nasdaq Composite
    COMP,
    +1.15%    ,
    another Nasdaq index that isn’t quite as heavily weighted toward Big Tech, rose 1.2% to 13,918.96.

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  • How to Turn Tesla Into a Dividend-Paying Stock

    How to Turn Tesla Into a Dividend-Paying Stock

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    Being an income investor usually means forgoing exciting stocks like


    Tesla


    and


    Nvidia


    for a regular payout. But that doesn’t have to be the case, thanks to an options play known as a “covered call.”

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  • After Microsoft defeat, ‘toothless’ FTC needs to pick better battles if it wants to rein in Big Tech

    After Microsoft defeat, ‘toothless’ FTC needs to pick better battles if it wants to rein in Big Tech

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    The U.S. Federal Trade Commission’s defeat as it sought to block Microsoft Corp.’s acquisition of videogame maker Activision Blizzard is yet another setback for an increasingly toothless regulator that needs to pick better battles with Big Tech.

    On Tuesday morning, a federal judge denied the FTC’s injunction that was seeking to block the software giant’s proposed $69 billion acquisition of Activision
    ATVI,
    +10.02%    ,
    best known for its hit videogame “Call of Duty.” The FTC argued that Microsoft
    MSFT,
    +0.19%
    could withhold “Call of Duty” and other Activision games from rival console platforms such as Sony’s PlayStation, and keep the games on its Xbox only.

    Microsoft, in a show of faith, committed in writing to keep “Call of Duty” on PlayStation on parity with Xbox for 10 years, agreed with Nintendo
    7974,
    +1.10%
    to bring “Call of Duty” to Switch and entered into several pacts to bring Activision content to several cloud gaming services, U.S. District Court Judge Jacqueline Scott Corley noted in her decision.

    “With these 10-year contracts that Microsoft made across the board with so many vendors, Nvidia
    NVDA,
    +0.53%    ,
    Nintendo and others, 10 years is a really long time, in my opinion,” said Sarah Hindlian-Bowler, an analyst at Macquarie Equity Research, in an interview Tuesday. “It is long enough to cover the arrival and maturity of the cloud gaming market….She understands  that 10 years is a very long long time to make a guarantee of this kind.”

    Also read: Regulators face an antitrust dilemma after Meta launches Threads

    Hindlian-Bowler said that she had been in the minority of Wall Street analysts in not believing the U.S. government would be able to block this deal.

    “The assumption that this somehow decreases the market is going to prove to be wildly incorrect,” she said, adding that she does not believe that the U.K.’s  Competition and Markets Authority will be able to block the deal either.

    The latest upset at the FTC was also not too surprising to other Capitol Hill watchers, especially in the light of other high-profile setbacks by the agency and its once-heralded commissioner, Lina Khan. When she was sworn in as chair of the FTC in mid-2021, Khan was hailed as the sheriff who would rein in Big Tech.

    “It’s hard to say I am surprised by the ruling because Khan has had a fairly unsuccessful track record,” said Owen Tedford, a senior research analyst at Beacon Policy Advisors. “The regulators are pushing the boundaries, deals that previously would have gone unchallenged have now gone challenged. And they are breaking precedent because Khan and company have expressed a dislike of settlements.”

    The FTC’s attempts to sue Meta Platforms Inc.
    META,
    +1.42%
    have had some defeats so far. In February, a California judge denied the FTC’s attempts to block Meta from buying a virtual-reality startup called Within Unlimited. The FTC’s suit to reverse Meta’s acquisitions of WhatsApp and Instagram, filed in 2021, is still plodding along.

    Additionally, the FTC recently filed a suit against Amazon.com Inc.
    AMZN,
    +1.30%    ,
    alleging that it is too difficult for consumers to cancel their Prime accounts, and the agency is reportedly also mulling another far-reaching suit against Amazon alleging that the e-commerce giant punishes merchants who do not use its logistics services. One analyst has already made a case that the FTC will lose that fight too.

    “I think that the FTC is in need of some change, in need of some refreshing and in need of doing a much better job of picking their battles,” said Hindlian-Bowler. “This does feel toothless, a lot of the fights they are picking are toothless. And unfortunately, they are missing the real battle. They are missing TikTok, they are missing the real fights where we actually have national security at risk.”

    In February, one of the Republican commissioners on the FTC resigned, and wrote an op-ed in the Wall Street Journal accusing Khan of disregarding the rule of law and due process.

    Compared to the European Union, which has had far more success implementing regulation to rein in Big Tech, the U.S. is still much weaker. “The EU seems to be having somewhat more success, levying big fines, getting these companies to change,” said Beacon’s Tedford. “The EU has passed these bills, but the U.S., despite these efforts, has not gotten there and is not going to get there for the next two years.”

    Money spent by Big Tech to lobby Congress in a huge part of the problem, whereas in Europe, “those lawmakers feel less beholden,” he added.

    More than a century ago, President Teddy Roosevelt, known for his “speak softly and carry a big stick” foreign policy, also used his bully pulpit to bust industrial monopolies.

    If Khan and her staff want to follow his lead and rein in Big Tech, they need to start picking their future battles more carefully — and carry bigger sticks.

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  • Meta, Bank of America, Affirm, AmEx, JetBlue, and More Stock Market Movers

    Meta, Bank of America, Affirm, AmEx, JetBlue, and More Stock Market Movers

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    This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers visit http://www.djreprints.com.

    https://www.barrons.com/articles/stock-market-movers-3beb512f

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  • Big Tech Is Running Out of Steam. These 3 AI Stocks Merit a Look.

    Big Tech Is Running Out of Steam. These 3 AI Stocks Merit a Look.

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    Technology stocks reigned supreme in the first half of the year, far outperforming the wider market. But sustaining that rally will be tough, and investors need to look now for tech stocks that are ready to benefit from the growth of artificial intelligence. 

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  • Activision’s Microsoft Saga Is Almost Over. It May Be Time to Sell the Stock.

    Activision’s Microsoft Saga Is Almost Over. It May Be Time to Sell the Stock.

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    The fate of


    Microsoft


    $69 billion purchase of


    Activision


    Blizzard will finally be known in the coming weeks—and investors may want to consider taking profits on the videogame maker’s stock before then.

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  • Nvidia Stock Is Down. Blame Tesla.

    Nvidia Stock Is Down. Blame Tesla.

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    This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers visit http://www.djreprints.com.

    https://www.barrons.com/articles/nvidia-stock-price-ai-tesla-5af5041c

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    Shares of newly minted $1 trillion company


    Nvidia


    were taking it on the chin Monday, and investors searching for a reason should look to


    Tesla

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  • Rebellion in Russia could trigger selloff in U.S. stocks and flight to safe assets, analysts say. Here’s what investors should know.

    Rebellion in Russia could trigger selloff in U.S. stocks and flight to safe assets, analysts say. Here’s what investors should know.

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    Watch what happens over the next 36 hours.

    That was the advice from one financial analyst as U.S. investors awoke on Saturday to news of an apparent armed rebellion against Moscow led by Yevgeny Prigozhin, the owner of the powerful Russian mercenary organization Wagner Group.

    Others speculated that the crisis in Russia could drive U.S. stocks lower, as some traders were already betting on a selloff once markets reopen on Monday due to this sudden spike in geopolitical risk.

    “The developments in Russia are ultimately going to suggest President Putin’s leadership is weakening quickly and that resources may shift away from the war with Ukraine. It is too early to say how this will impact Wall Street, but the risk of desperate measures from Putin might make some investors nervous,” Edward Moya, senior market analyst at Oanda, said Saturday.

    A simmering feud between Prigozhin, the leader of the military contractor whose mercenary forces have been fighting alongside Russian military troops in Ukraine, and the Russian Defense Ministry came to a head early Saturday as Prigozhin led his troops to successfully overtake a Russian military outpost near the Ukrainian frontier, which the Kremlin has used as its command center for overseeing the war in Ukraine.

    Amid the mixture of reliable information and unfounded speculation, market analysts have scrambled to make sense of the situation and what it might mean for financial markets and the global economy.

    The main theme that has emerged so far is that U.S. stocks would suffer unless the Russian military managed to quickly suppress the rebellion, as may have occurred with reports late Saturday that Prigozhin had halted a Wagner advance on Moscow and, in fact, might be relocating to neighboring Belarus. But how would something that could potentially cut short the war in Ukraine — which has been a bugbear for markets since the full-scale invasion by Russian forces in February 2022 — be a negative for stocks?

    The answer is that chaos leads to uncertainty, and that uncertainty is anathema to markets — especially when it could disrupt global oil and food supplies.

    “I’d bet on this creating more uncertainty which is generally going to be negative for risk … in the short term at least you see higher geopolitical risk premia — longer term the risks are on both sides really: does this precipitate the collapse of the Russian front and the war ends?” said Neil Wilson, chief market analyst at Finalto, in a note to clients on Saturday.

    Others noted that the crisis is coming at a vulnerable time for U.S. markets, while Michael Antonelli, a market strategist at R.W. Baird & Co., suggested in a tweet that the crisis “has to be” bearish for U.S. stocks.

    The S&P 500 index
    SPX,
    -0.77%
    closed out its worst week since March on Friday as a series of interest-rate hikes in the U.K. and across Europe last week sparked fresh fears of a global recession. Some analysts noted that the pullback swiftly followed signs that investors are growing more bullish following a powerful rally that sent stocks to their highest levels in 14 months. There are concerns that this shift in sentiment could presage investors’ final capitulation.

    Sven Henrich, founder and lead strategist of Northman Trader, noted that the Cboe Volatility Index
    VIX,
    +4.11%    ,
    the market’s so-called fear gauge, which measures the stock market’s expectations for volatility over the next 30 days, managed to finish last week below 13.5, its lowest level since January 2020, even as stocks pulled back.

    If stocks do continue to slide, that would mean new lows for the Vix have proved to be a reliable counterindicator, suggesting that investors had grown complacent before being walloped by a fresh shock.

    Asian markets will be the first to react to ongoing developments by Sunday evening Eastern time, but derivatives traders using CME Group’s Globex platform to trade swaps tracking the value of U.S. equity indexes are already betting on a selloff.

    Meanwhile, bitcoin
    BTCUSD,
    +0.11%    ,
    an asset that does reliably trade 24/7, was down just 0.8% at $30,675, a slight pullback after achieving its highest level in a year late last week. By Saturday evening the leading cryptocurrency has reversed that earlier dip.

    Where might investors turn for safety if markets do become chaotic?

    Finalto’s Wilson said investors could seek shelter in the currency market, where the U.S. dollar
    DXY,
    +0.47%    ,
    Swiss franc
    USDCHF,
    -0.02%
    and maybe the euro
    EURUSD,
    +0.32%
    and British pound
    GBPUSD,
    +0.02%
    could benefit from a spike in demand. More “de-risking” could send investors into ultrasafe government bonds like U.S. Treasurys
    TMUBMUSD10Y,
    3.741%    ,
    which could help to push yields lower, as bond yields move inversely to prices.

    Wilson anticipated that European indexes could be “more exposed to de-risking due to makeup and proximity to Russia and the war in Ukraine.” He also noted the possibility that this latest crisis could send the S&P 500 and Nasdaq Composite
    COMP,
    -1.01%
    higher if investors decided to seek shelter in high-quality growth names like Apple Inc.
    AAPL,
    -0.17%    ,
    Nvidia Corp.
    NVDA,
    -1.90%
    or Microsoft Corp.
    MSFT,
    -1.38%    ,
    which have helped to drive this year’s equity-market rally.

    Whatever happens, the outcome of the crisis should be more clear within the next 35 hours, Wilson said.

    “[H]ow the market opens after the weekend will depend on what happens in the next 36 hours. … [I]t could all be over by then,” Wilson said.

    Regardless, one of the first to interpret the market’s reaction on Monday will be Melbourne-based Chris Weston, head of research at online broker Pepperstone.

    Until then, he cautioned investors against reading too much into the Wagner situation, since analysts’ visibility into a very complicated geopolitical situation is “poor.”

    “The humble market participant would simply say they have no edge in knowing how this plays out and our visibility to read this through to markets is currently poor — the information is often biased and it’s hard to truly know what is fact and what is fed to influence. … [W]ill this lead to genuine regime change, fail or perhaps inflame and lead to a market shock?” Weston said in comments provided to MarketWatch.

    “At this point we simply don’t know, but it feels like we get enough clarity on potential outcomes and even timelines in the next 24-48 hours — at this point the prospect of modest downside risk on Monday is elevated and naturally we’ll be watching crude and EU assets most closely,” he said.

    Terry Haines, founder of Pangea Policy, said in an email to clients that the ongoing uncertainty fueled by the Wagner rebellion reveals the fragility of the Putin regime, and might marginally boost chances of a Ukraine victory.

    But Haines also conceded that it’s a “developing and unstable situation with various facets that on net add to geopolitical uncertainties, to which markets usually react negatively.” Investors must also consider that, should that rebellion fail, it could be “replaced by stronger Russian control” or create further instability as “Wagner disintegrates.”

    In that same vein, Jim Bianco, head of Bianco Research, offered up a joke aimed at all the armchair geopolitical analysts suddenly flocking to Twitter.

    Markets may take a look at this crisis and view it as a “bullish development after some initial volatility, the Kobeissi Letter’s editor in chief and founder, Adam Kobeissi, told MarketWatch in Saturday comments.

    “After all, the end of the war in Ukraine is the market’s top geopolitical driver right now, and if this increases the odds of a peace agreement and/or Russia withdrawing from Ukraine, it is likely to be perceived as bullish over the next few weeks,” he said.

    He recommended that investors keep an eye on prices of oil and gold, which could be particularly sensitive to any fresh developments.

    “If this means more conflict,” he said, “then oil
    CL.1,
    +0.51%    ,
    bonds
    TMUBMUSD10Y,
    3.741%
    and gold
    GC00,
    +0.04%
    are poised to rally.”

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  • Here are the Republicans running for president as former Texas Rep. Will Hurd enters the 2024 race

    Here are the Republicans running for president as former Texas Rep. Will Hurd enters the 2024 race

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    The increasingly crowded 2024 Republican presidential field is up to 12 relatively well-known contenders. The latest to declare his candidacy is former Texas Rep. Will Hurd, who entered the race Thursday.

    Hurd singled out both President Joe Biden and former President Donald Trump in his announcement, saying Biden would win re-election if Trump secured the GOP nomination. Trump has a big lead in polls of Republican primary voters.

    The ex-congressman joins several other presidential hopefuls who have thrown their hats in the ring this month. Miami Mayor Francis Suarez launched his bid last week, and two weeks ago, former Vice President Mike Pence, former New Jersey Gov. Chris Christie and current North Dakota Gov. Doug Burgum all formally kicked off their campaigns.

    Meanwhile, Virginia Gov. Glenn Youngkin said last month that he won’t be on the presidential campaign trail in 2023 because of elections to his state’s legislature in November, but he appears to have left the door open to a 2024 White House run.

    Below is MarketWatch’s list of Republican presidential contenders and the status of their candidacies.

    Trump grabbed the spotlight this month as he pleaded not guilty on June 13 following his federal indictment on 37 charges, including unauthorized retention of classified documents and obstruction of justice.

    See: Latest Trump indictment could help him in the 2024 GOP primary but not in the general election, analysts say

    Plus: Trump calls latest indictment ‘election interference’

    On the Democratic side, Biden officially launched his re-election campaign in April, even as most Americans don’t approve of his performance. The president has been talking up the strong job market and his legislative record.

    The first official debate of the GOP presidential primary is slated to be held in Milwaukee on Aug. 23. The Republican National Committee said there will be a second debate on Aug. 24 if “enough candidates qualify to make it necessary.”

    The list above features relatively high-profile names, but there are lesser-known GOP presidential hopefuls as well, such as Aaron Day, who is known in part for his 2016 run against former Sen. Kelly Ayotte of New Hampshire, a fellow Republican; Perry Johnson, a former gubernatorial candidate in Michigan; Steve Laffey, a former mayor of Cranston, R.I.; and former Montana Secretary of State Corey Stapleton.

    A number of other Republican politicians have also been talked about as potential 2024 contenders but haven’t said they are running. That group includes Texas Gov. Greg Abbott, who has passed on speaking in the key primary state of Iowa; John Bolton, a former national-security adviser and former ambassador to the United Nations; former Rep. Liz Cheney of Wyoming, who has run an ad in New Hampshire, another key state; South Dakota Gov. Kristi Noem; and former Rep. Mike Rogers of Michigan.

    Among the prominent Republicans who have said they’re not seeking their party’s presidential nomination in 2024 are Sen. Ted Cruz of Texas, former Maryland Gov. Larry Hogan, Georgia Gov. Brian Kemp, former Secretary of State Mike Pompeo and New Hampshire Gov. Chris Sununu.

    From MarketWatch’s archives (September 2022): In a conversation with MarketWatch, Vivek Ramaswamy says companies should ‘leave politics to the politicians’

    Democrats are closing ranks behind Biden, although author and activist Marianne Williamson has said she’s seeking the party’s nomination again and vigorously defended her decision to challenge the president in an extensive question-and-answer session with MarketWatch. Antivaccine activist Robert F. Kennedy Jr. is also mounting a long-shot challenge to Biden and held a kickoff event for his campaign in April.

    Among third-party candidacies, Cornel West, a former Ivy League professor now at Union Theological Seminary, has announced he’s a presidential candidate for the People’s Party. In addition, a group called “No Labels” has been considering a “unity ticket” for 2024, saying that a rematch between Biden and Trump would be “the sequel that no one asked for,” but a Politico report said the group would not submit a third-party challenger if DeSantis becomes the Republican nominee.

    Now read: Nikki Haley says ‘no Republican president will have the ability to ban abortion nationwide’

    Also: Biden criticizes DeSantis over his Medicaid stance while in Florida

    Plus: Billionaire investor Bill Ackman says JPMorgan’s Jamie Dimon should run for president

    Robert Schroeder contributed.

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  • Stocks end sharply higher, S&P 500 scores longest win streak since 2021

    Stocks end sharply higher, S&P 500 scores longest win streak since 2021

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    U.S. stocks booked big gains on Thursday, a day after the Federal Reserve skipped a June rate hike, but indicated more increases could be on the table this year. The Dow Jones Industrial Average
    DJIA,
    +1.26%
    jumped about 430 points, or 1.3%, ending near 34,409, according to preliminary FactSet data, while the S&P 500 index
    SPX,
    +1.22%
    gained 1.2% to score a sixth session in a row of wins and its longest stretch of straight gains since Nov. 8, 2021, according to Dow Jones Market Data. The Nasdaq Composite Index
    COMP,
    +1.15%
    closed up 1.2%. The rally for stocks comes in the wake of the S&P 500 emerging from its longest bear market in decades, with shares of big technology companies continuing to lead the index higher on Thursday. Its Communications Services segment rose 1.5% Thursday, while the Information Technology sector gained 1.3%, according to FactSet. Critics of the rally have pointed to exuberance around new advances in artificial intelligence helping lift a select set of seven stocks higher. One of those stocks, Microsoft Corp.
    MSFT,
    +3.19%
    rose about 3.5% to $349, per preliminary data, a record close on Thursday.

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  • Judge temporarily blocks Microsoft’s $69 billion purchase of Activision

    Judge temporarily blocks Microsoft’s $69 billion purchase of Activision

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    A federal judge late Tuesday approved a request by the Federal Trade Commission to temporarily block Microsoft Corp.’s $69 billion acquisition of Activision Blizzard Inc.

    U.S. District Judge Edward Davila in San Francisco issued a temporary restraining order in order to “maintain the status quo,” and set a evidentiary hearing to be held June 22-23 on whether a preliminary injunction should be issued.

    The deal was set to be finalized as soon as this Friday. Tuesday’s order said the deal may not close until at least five days after the court’s preliminary injunction ruling.

    The acquisition has raised antitrust concerns that Microsoft
    MSFT,
    +0.74%    ,
    with its Xbox gaming console, could withhold hit Activision Blizzard
    ATVI,
    +1.17%
    videogame franchises such as “Call of Duty” and “Overwatch” from competing console platforms.

    On Monday, the FTC filed for a restraining order and injunction to block the deal, arguing “a preliminary injunction is necessary to maintain the status quo and prevent interim harm to competition.”

    “This loss of competition would likely result in significant harm to consumers in multiple markets at a pivotal time for the industry,” the FTC said in its filing Monday.

    In a statement Tuesday evening, a Microsoft spokesperson said: “Accelerating the legal process in the U.S will ultimately bring more choice and competition to the gaming market. A temporary restraining order makes sense until we can receive a decision from the court, which is moving swiftly.” 

    While EU regulators approved the deal in May, British regulators have tentatively scheduled appeal hearings after saying in April they would prohibit the purchase.

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  • How a hawkish Fed could kill a baby bull-market rally in U.S. stocks

    How a hawkish Fed could kill a baby bull-market rally in U.S. stocks

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    It is the notion that the Federal Reserve could deliver a hawkish jolt to markets even if it refrains from raising rates when its two-day policy meeting ends on Wednesday.

    There are concerns that such an outcome could spark a turnaround in U.S. stocks, especially if an uncomfortably strong reading on May inflation — due this coming Tuesday just as the Fed’s policy meeting is slated to begin — pushes the central bank toward something even more extreme, like delivering a rate increase on Wednesday despite intimating that it plans to abstain.

    The May consumer-price index is forecast to rise 4.0% for the year, down from a rise of 4.9%, while the core index, excluding food and energy prices, is seen easing to a rise of 5.3% from 5.5%.

    On the other hand, signs that the economy has weakened and inflation has continued to fade would help the Fed to justify skipping a rate increase in June — as several senior officials have suggested it will — while signaling that a potential hike at its following meeting in July could be the final increase for the cycle.

    “Softening U.S. data should support calls that a June skip could eventually turn into a July pause. Next week, most of the data is expected to remain weak or little changed: retail sales could be flat m/m, the Fed regional surveys should remain in negative territory, and consumer sentiment will waver,” said Craig Erlam, senior market analyst at OANDA, in emailed commentary.

    See: The Fed’s crystal ball on inflation appears off the mark again. Here’s comes another fix.

    Wednesday’s meeting comes at a critical time for the market. U.S. stocks have powered ahead for more than six months, with the S&P 500
    SPX,
    +0.11%
    having risen more than 20% off its Oct. 12 closing low, according to FactSet. Just this past week, the index exited bear-market territory for the first time in a year.

    The index is up 12% so far in 2023, reversing some of its 19.4% decline from 2022, its biggest calendar-year drop since 2008, according to Dow Jones Market Data.

    So far this year, highflying tech stocks have helped to paper over weakness in other areas of the market. This has started to change over the past two weeks, as small-cap and value-stocks have lurched suddenly higher, but there are fears that the Fed could hurt the most interest-rate sensitive technology names if Chairman Jerome Powell hints at rates rising higher than investors presently anticipate.

    The so-called “Megacap eight” stocks — a group that includes both classes of Alphabet Inc. stock
    GOOG,
    +0.16%

    GOOGL,
    +0.07%    ,
    Microsoft Corp.
    MSFT,
    +0.47%    ,
    Tesla Inc.
    TSLA,
    +4.06%    ,
    Microsoft Corp.
    MSFT,
    +0.47%    ,
    Netflix Inc.
    NFLX,
    +2.60%    ,
    Nvidia Corp.
    NVDA,
    +0.68%    ,
    Meta Platforms Inc.
    META,
    +0.14%
    — have driven nearly all of the S&P 500’s gains this year, according to Ed Yardeni, president of Yardeni Research, who included his analysis in a note to clients.

    But since the beginning of June, the Russell 2000
    RUT,
    -0.80%    ,
    a gauge of small-cap stocks in the U.S., has risen more than 6.6%, according to FactSet data. The Russell 1000 Value Index
    RLV,
    -0.15%
    has also gained nearly 3.7% in that time. During this period, both have outperformed the tech-heavy Nasdaq Composite
    COMP,
    +0.16%    ,
    although the Nasdaq remains the market leader, having risen 26.7% since Jan. 1.

    Concerns about the Fed’s plans intensified this week after the Bank of Canada delivered a surprise interest-rate hike, ending a four-month pause. The BOC’s decision followed a similar move by the Reserve Bank of Australia, and partly as a result, U.S. Treasury yields rose and tech-heavy stocks tumbled, with the Nasdaq logging its biggest drop since April 25, according to FactSet.

    While small-caps held up amid the chaos, the reaction stoked fears that something similar might be in store for markets when the Fed delivers its latest decision on interest rates Wednesday.

    Consequences of a ‘hawkish pause’

    Stocks could be in for more turbulence if the Fed signals it plans to follow the BOC and RBA with a hawkish surprise of its own. And it wouldn’t necessarily need to hike rates to pull this off, market strategists said.

    Emerging signs of complacency in the market could complicate its reaction. That the Cboe Volatility Index has fallen back below 15
    VIX,
    +1.32%
    for the first time since before the arrival of COVID-19 is one such sign that investors aren’t worried enough about a potential selloff, said Miller Tabak + Co.’s Chief Market Strategist Matt Maley.

    Another analyst likened the potential fallout from a hawkish Fed to the bad old days of 2022.

    “If the Fed signals that rates will be going up again, the market playbook could read more like 2022 than what we have seen so far in 2023,” said Will Rhind, the founder and CEO of GraniteShares, during a phone interview with MarketWatch.

    Perhaps the biggest wild card is Tuesday’s inflation report. If the numbers come in hot, Powell and his peers could face pressure to hike rates without priming the market first.

    For this reason, Rhind believes investors are underestimating the likelihood of a hike next week, even as Fed funds futures currently see a roughly 70% probability that the central bank will stand pat, according to the CME’s FedWatch tool.

    And Rhind isn’t the only one. Leslie Falconio, chief investment officer at UBS Global Wealth Management, says the Tuesday inflation report could be a make-or-break moment for markets, summing up fears expressed elsewhere on Wall Street in a recent note to clients.

    “We believe another rate increase is on the table, and that the CPI release on 13 June, a day before the Fed decision, will be decisive. In our view, another hike won’t have a material impact on the pace of economic growth,” Falconio said.

    What should investors watch out for?

    Assuming the Fed does forego a hike in June, there are a few key tells that investors should watch for to determine whether a “hawkish pause” is under way.

    Perhaps the most important will be how the Fed handles changes to its closely watched “dot plot.” A modestly higher median dot would send an unmistakable signal to the market that the Fed will continue with its campaign of tightening monetary policy, perhaps to the detriment of the market, said Patrick Saner, head of macro strategy at the Swiss Re Institute.

    “If the Fed skips but wanted to avoid the impression of the hiking cycle being done, it would need to include a revision of the dot plot. They could justify that with a more resilient GDP forecast and a higher inflation outlook. So I think it is the dots and then the statement that will be in focus,” Saner said during a phone interview with MarketWatch.

    Beyond that, whatever the Fed does or says will likely be viewed through the lens of economic data that is due out next week. In addition to the Tuesday inflation report, a report on May retail sales is due out Thursday, and a on consumer sentiment from the University of Michigan will land on Friday. All these data points could influence investors’ impressions of the state of the U.S. economy, and their expectations for how the Fed will behave as a result.

    See also: Puzzled by the ebb and flow of recession worries? Then the MarketWatch weekly recession worry gauge is for you.

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  • A stock-market milestone: Apple is now worth more than the entire Russell 2000

    A stock-market milestone: Apple is now worth more than the entire Russell 2000

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    The market capitalization of Apple Inc. has surpassed that of the entire Russell 2000 for two weeks, the longest stretch on record, according to Bloomberg data.

    Apple’s market capitalization, which measures how much the company is worth based on the value of all its outstanding stock, surpassed that of the Russell 2000
    RUT,
    +1.19%
    on April 27 and has held higher through Monday. The only other time that occurred was Sept. 1, 2020, when Apple’s valuation passed that of the small-cap index for only a day.

    Apple’s premium over this group of small-cap stocks continued to widen over the past two weeks as the consumer-technology giant reported earnings that surpassed Wall Street analysts’ expectations.

    With a market capitalization of roughly $2.7 trillion, Apple is now worth roughly $100 billion more than the combined value of all 2,000 stocks in the Russell 2000, according to Bloomberg data shared with MarketWatch.

    To be sure, the gap narrowed somewhat on Monday as Apple shares declined by 0.4% to $171.80, while the Russell 2000 gained 1.3% to trade at 1,763.

    A team of stock-market analysts from Bespoke Investment Group illustrated the trend in a chart shared on Twitter Monday.

    U.S. equity benchmarks have powered higher in 2023, but some say the strength in popular indexs like the S&P 500 and Nasdaq Composite has masked weakness in other corners of the market.

    Both the S&P 500, which has risen more than 7% year-to-date, and the Nasdaq Composite, which has risen nearly 18%, owe the bulk of their gains to a handful of megacap technology stocks including Apple, Microsoft Corp.
    MSFT,
    +0.16%    ,
    Alphabet Inc.
    GOOG,
    -0.81%
    and Nvidia Corp.
    NVDA,
    +2.16%

    The top 10 stocks in the S&P 500 hold a 29% weight in the index, and have been responsible for around 70% of its year-to-date performance gains, according to a MarketWatch report from last week.

    See: The S&P 500 is top-heavy with tech. Here’s what that says about future stock-market returns.

    The Russell 2000, meanwhile, is essentially unchanged since the start of 2023. Apple, by comparison, has risen more than 32% since Jan. 1, according to FactSet data. The relative weakness in small-caps has inspired discussion about whether this might be a buying opportunity, as market strategists told Barron’s.

    See: Small-Cap Stocks Have Been Crushed. 3 With Big Potential.

    Small-caps have struggled against a plethora of headwinds since the start of 2023. Shrinking corporate earnings, a string of regional-bank failures and signs of a looming recession have taken a heavy toll. Facing so much uncertainty, equity investors have sought safety in shares of megacap technology names this year following a punishing selloff in 2022.

    “It is pretty incredible that one company could overtake an entire universe of small-cap stocks in terms of size,” said Callie Cox, U.S. equity strategist at eToro, during a phone interview with MarketWatch. “To me, it really speaks to how beaten down small-caps are.”

    When Apple reported earnings for the quarter ended in March last week, the company’s management revealed a surprise growth in its iPhone business, which helped to overcoming a shortfall in Mac revenue. The company also promised investors billions more in dividends and stock repurchases, which helped to boost the stock price. Apple’s shares traded higher in response.

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  • CEOs of Microsoft and Alphabet called to AI meeting at White House

    CEOs of Microsoft and Alphabet called to AI meeting at White House

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    Vice President Kamala Harris will host the chief executives of Alphabet GOOG GOOGL, Microsoft MSFT, OpenAI and Anthropic at the White House on Thursday to discuss artificial-intelligence issues.

    Harris and senior administration officials aim to have a “frank discussion” of the risks in AI development and of “ways we can work together to ensure the American people benefit from advances in AI while being protected from its harms,” according to an invitation for the meeting obtained by MarketWatch.

    The…

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