Every weekday the CNBC Investing Club with Jim Cramer holds a “Morning Meeting” livestream at 10:20 a.m. ET. Here’s a recap of Tuesday’s key moments. Stocks fell Tuesday despite an early pop in tech stocks, led by Oracle ‘s 11% gain. The database software maker posted a fiscal 2025 first-quarter beat on the top and bottom lines Monday after the bell. The company is aggressively building out data centers to meet artificial intelligence demands from its customers. The Investing Club portfolio has lots of exposure to the AI buildout through its investments in Eaton , Dover , Broadcom and Nvidia , among others. Meanwhile, shares of Apple were down 1% following the company’s iPhone 16 event Monday. While the announcements on its new AI capabilities weren’t needle movers for the stock, they should be a long-term driver of growth. Bank stocks were also down Tuesday, with shares of JPMorgan falling 6.5% after the company offered a cautious outlook at a banking conference. Club stock Wells Fargo was being painted with a broad brush, falling 2%. At the conference, Wells made no change in its forecasts. Jim reiterated his favorable view on Wells Fargo, citing its 3% annual dividend yield and “incredibly cheap” valuation. Also on watch are proposals from the Fed’s vice chair for supervision that would lower the extra capital cushion required of big banks. Costco caught a downgrade Tuesday from Redburn Atlantic. The analysts went to a neutral rating from buy — calling the stock’s valuation too expensive. The analysts increased Costco’s price target to $890 per share from $860. But that’s only right at the level Costco was trading Tuesday. Analysts said the current risk/reward profile on the stock is “skewing less favorably given the even higher than normal expectations.” Jim said, however, “Costco has been expensive and always will be expensive,” suggesting it’s worth it. Stocks covered in Tuesday’s rapid fire at the end of the video were Southwest , Oracle , Johnson Controls , Boot Barn , and Goldman Sachs . (Jim Cramer’s Charitable Trust is long ETN, DOV, AVGO, NVDA, WFC, COST. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
New models of the Apple iPhone 16 are displayed after Apple’s “It’s Glowtime” event in Cupertino, California, September 9, 2024.
Nic Coury | AFP | Getty Images
This report is from today’s CNBC Daily Open, our 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.
Export growth in China China’s exports in August rose 8.7% year on year, in U.S. dollar terms, beating Reuters’ estimates of a 6.5% rise. Exports to the EU grew 13% from a year earlier, the most among China’s major trading partners, according to CNBC calculations of official data. Imports growth at 0.5% fell short of analysts’ expectations.
New iPhones Apple unveiled lots of new products on Monday night. Highlights: the iPhone 16 Pro and Pro Max get larger screens, while their non-pro siblings finally get the Pro’s “action” button; the freshly redesigned Apple Watch Series 10; AirPods 4 earbuds. Apple’s AI features will launch in beta on the new iPhones — investors will monitor if they push up flagging iPhone sales.
$400 million hit to Goldman Goldman Sachs will post a roughly $400 million pretax hit to its third-quarter results, said CEO David Solomon at a conference on Monday, as the bank winds down its ill-fated foray into consumer banking. Those ventures include Goldman’s GM Card business and a separate portfolio of loans.
[PRO] Stocks to ride out shaky September September is historically the worst month for stocks. It’s the only month during which markets fell for four consecutive years. The volatility we’ve experienced at the start of the month seems to continue this unwelcome trend. Still, there are some steady stocks investors can consider to ride out September’s roller coaster.
Maybe all it takes are shiny new things to lift our mood and take our minds off recession fears.
I’m jesting — but just partially.
Apple on Monday launched sleek new iPhones, watches and earphones. The excitement of the event and the prospect of having something look forward to may have lifted market sentiment.
Detractors who think that’s a far-fetched assertion should remember Apple dominates more than half of smartphone shipments in the U.S., according to Counterpoint Research. Further, a 2023 Bloomberg survey found 79% of Gen Zers prefer iPhones over other smartphones, implying that Apple’s market share could grow more as that demographic gains earning power.
True, post-event, Apple shares just crawled up 0.04%. But, as CNBC’s Kelly Evans points out, the Cupertino-headquartered company’s stock tends to fall after product announcements.
This reversal of the trend offers a glimmer of hope that Apple’s plans to integrate AI into its phones will rejuvenate iPhone sales, which have been slumping amid increased competition from Chinese brands.
And when the S&P 500’s biggest constituent is experiencing favorable winds, other stocks will also benefit from its slipstream.
Apart from Apple’s announcement, there wasn’t any other material news that would have impacted markets.
Of course, Apple’s event is not the sole reason markets rose yesterday. Last week’s broad sell-off presents investors with opportunities to pick up stocks at a relatively cheaper price, which would induce a rebound rally.
That said, the consumer and producer price index reports coming out Wednesday and Thursday, respectively, are concrete pieces of data that have the potential to affect markets dramatically.
They’ll also let us know if we can afford those shiny new things that Apple’s dangling in front of us.
– CNBC’s Pia Singh and Lisa Kailai Han contributed to this story.
Attendees inspect the new iPhone 16 Pro and 16 Pro Max during an Apple special event at Apple headquarters on September 09, 2024 in Cupertino, California.
This report is from today’s CNBC Daily Open, our 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.
New iPhones Apple unveiled lots of new products on Monday night. Highlights: the iPhone 16 Pro and Pro Max get larger screens, while their non-pro siblings finally get the Pro’s “action” button; the freshly redesigned Apple Watch Series 10; AirPods 4 earbuds. Apple’s AI features will launch in beta on the new iPhones — investors will monitor if they push up flagging iPhone sales.
Debate over rate cuts Economists such as George Lagarias of Forvis Mazars think a 50-basis-points rate cut “might send a wrong message to markets.” Michael Yoshikami, CEO of Destination Wealth Management, however, thinks it would be “a very positive sign,” echoing Nobel Prize winner Joseph Stiglitz’s opinion that a 50-point cut should be on the table.
$400 million hit to Goldman Goldman Sachs will post a roughly $400 million pretax hit to its third-quarter results, said CEO David Solomon at a conference on Monday, as the bank winds down its ill-fated foray into consumer banking. Those ventures include Goldman’s GM Card business and a separate portfolio of loans.
[PRO] Macro factors don’t sway Buffett In recent weeks, markets have gyrated because of concerns over the U.S. economy’s health, the state of the labor market, the trajectory of rate cuts, among many other factors. To Warren Buffett, however, none of those macroeconomic factors matters when he invests.
Maybe all it takes are shiny new things to lift our mood and take our minds off recession fears.
I’m jesting — but just partially.
Apple on Monday launched sleek new iPhones, watches and earphones. The excitement of the event and the prospect of having something look forward to may have lifted market sentiment.
Detractors who think that’s a far-fetched assertion should remember Apple dominates more than half of smartphone shipments in the U.S., according to Counterpoint Research. Further, a 2023 Bloomberg survey found 79% of Gen Zers prefer iPhones over other smartphones, implying that Apple’s market share could grow more as that demographic gains earning power.
True, post-event, Apple shares just crawled up 0.04%. But, as CNBC’s Kelly Evans points out, the Cupertino-headquartered company’s stock tends to fall after product announcements.
This reversal of the trend offers a glimmer of hope that Apple’s plans to integrate AI into its phones will rejuvenate iPhone sales, which have been slumping amid increased competition from Chinese brands.
And when the S&P 500’s biggest constituent is experiencing favorable winds, other stocks will also benefit from its slipstream.
Apart from Apple’s announcement, there wasn’t any other material news that would have impacted markets.
Of course, Apple’s event is not the sole reason markets rose yesterday. Last week’s broad sell-off presents investors with opportunities to pick up stocks at a relatively cheaper price, which would induce a rebound rally.
That said, the consumer and producer price index reports coming out Wednesday and Thursday, respectively, are concrete pieces of data that have the potential to affect markets dramatically.
They’ll also let us know if we can afford those shiny new things that Apple’s dangling in front of us.
– CNBC’s Pia Singh and Lisa Kailai Han contributed to this story.
Big banks are jumping headfirst into the AI race. Over the past year, Wall Street’s largest names — including Goldman Sachs , Bank of America , Morgan Stanley , Wells Fargo to JPMorgan Chase — ramped up their generative artificial intelligence efforts with the aim of boosting profits. Some are striking deals and partnerships to get there quickly. All are hiring specialized talent and creating new technologies to transform their once-stodgy businesses. The game is still in its early innings, but the stakes are high. In his annual shareholder letter, JPMorgan CEO Jamie Dimon compared artificial intelligence to the “printing press, the steam engine, electricity, computing, and the internet.” The banks that can get it right should increase productivity and lower operational costs — both of which would improve their bottom lines. In fact, AI adoption has the potential to lift banking profits by as much as $170 billion, or 9%, to more than $1.8 trillion by fiscal year 2028, according to research from Citi analysts . Early-stage generative AI use cases are often for “augmenting your staff to be faster, stronger and better,” said Alexandra Mousavizadeh, co-CEO and co-founder of AI benchmarking and intelligence platform Evident Insights. “Over the course of the next 12 to 18 to 24 months, I think we’re going to see [generative AI] move along the maturity journey, going from internal use cases being put into production [to more] testing external-facing use cases.” Companies are only just starting to grasp the promise of this tech. After all, it was only following the viral launch of ChatGPT in late 2022 that the world outside of Silicon Valley woke up to the promise of generative AI. OpenAI’s ChatGPT, backed by Microsoft and enabled by Nvidia chips, sparked an investor stampede into anything AI. The AI trade also pushed corporate boardrooms in three ways: find use cases for the tech, strike partnerships to enable it, and hire specialized employees to build and support it. MS YTD mountain Morgan Stanley YTD AI use cases for key businesses Morgan Stanley was among the first on Wall Street to publicly embrace the technology, unveiling two AI assistants for financial advisors powered by OpenAI. Launched in September 2023, the AI @ Morgan Stanley Assistant gives advisors and their staff quick answers to questions regarding the market, investment recommendations, and various internal processes. It aims to free up employees from administrative and research tasks to engage more with their clients. Morgan Stanley this summer rolled out another assistant , called Debrief, which uses AI to take notes on financial advisors’ behalf in their client meetings. The tool can summarize key discussion topics and even draft follow-up emails. “Our immediate focus is on using AI to increase the time our employees spend with clients. This means using AI to reduce time-consuming tasks like responding to emails, preparing for client meetings, finding information, and analyzing data,” said Jeff McMillan, head of firmwide AI for Morgan Stanley. He made these comments in a statement emailed to CNBC last week. “By freeing up this time, our employees can focus more on building relationships and innovating.” In the long run, AI could help Morgan Stanley’s wealth business get closer to reaching management’s goal of more than $10 trillion in client assets . In July, the firm reported client assets of $7.2 trillion. To be sure, McMillan said in June it would take at least a year to determine whether the technology is boosting advisor productivity. If it does, that would welcomed news for shareholders after Morgan Stanley’s wealth segment missed analysts’ revenue expectations in the second quarter . WFC YTD mountain Wells Fargo YTD It’s not just Morgan Stanley. Our other bank holding Wells Fargo has its own virtual AI assistant. Dubbed Fargo , it helps retail customers get answers to their banking questions and execute tasks such as turning on and off debit cards, checking credit limits, and offering details for transactions. Fargo, powered by Google Cloud’s artificial intelligence, was launched in March 2023. For a large money center bank like Wells Fargo — one that’s historically catered to Main Street — the Fargo assistant could bolster the bank’s largest reporting segment. The consumer, banking and lending unit in the second quarter accounted for roughly 43% of the $20.69 billion booked in companywide revenue. Striking AI deals, landing partnerships None of this would be possible without partnerships. Big banks have tapped startups and tech behemoths alike for access to their large language models (LLMs) to build their own AI products. In addition to Morgan Stanley’s OpenAI deal and Wells Fargo’s ties with Google, Deutsche Bank also partnered with Club name Nvidia in 2022 to help develop apps for fraud protection . BNP Paribas announced on July 10 a deal with Mistral AI — often seen as the European alternative to OpenAI — to embed the company’s LLMs across its customer services, sales and IT businesses. Shortly after that, TD Bank Group signed an agreement with Canadian AI unicorn Cohere to utilize its suite of LLMs as well. “We watch out for these [deals] because that means they are onboarding a lot of that capability,” Evident’s Mousavizadeh said. Big AI hires for top Wall Street firms Banks have also had to do a lot of hiring to make their AI dreams come true — poaching swaths of data scientists, data engineers, machine learning engineers, software developers, model risk analysts, policy and governance managers. Despite layoffs across the banking industry, AI talent at banks grew by 9% in the last six months, according to July data from Evident , which tracks 50 of the world’s largest banks. That was double the rate of growth seen in total headcount across the sector. Mousavizadeh said that one of the major “characteristics of the leading banks in AI is that they’re not stopping hiring. The leading banks are the [ones] that are hiring the most AI talent.” In July, Wells Fargo named Tracy Kerrins as the new head of consumer technology to oversee the firm’s new generative AI team. And Morgan Stanley’s McMillan was promoted to AI head in March after serving as a tech executive in the wealth division. He’s helped oversee Morgan Stanley’s OpenAI-related projects. JPMorgan last year also appointed Teresa Heitsenrether as its chief data and analytics officer in charge of AI adoption. Bottom line The more we see these firms spend and invest in AI talent, the more serious they appear to be about the future of the nascent tech. We don’t expect these third-party partnerships, new use cases, and slew of hires to create exponential returns overnight. However, As long as these costs don’t outweigh return on investment (ROI), we’re happy with Wells Fargo and Morgan Stanley’s moves to innovate. “We’re very much in the foothills of this, and we’re going to see much more ROI generated off the AI use cases in 2025,” Mousavizadeh said. “But, I think you’re going to see a real tipping point in 2026.” (Jim Cramer’s Charitable Trust is long NVDA, WFC, GOOGL, MSFT, MS. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Pedestrians walk along Wall Street near the New York Stock Exchange (NYSE) in New York, US, on Tuesday, Aug. 27, 2024.
Nvidia CEO Jensen Huang speaks during Computex 2024 in Taipei on June 4, 2024.
I-hwa Cheng | AFP | Getty Images
Nvidia shares fell 2% in extended trading Tuesday after Bloomberg reported that the company received a subpoena from the Department of Justice as part of an antitrust investigation.
The slide comes after Nvidia dropped nearly 10% during regular trading, wiping $279 billion off its market cap.
The DOJ probe has not reached the stage of a formal complaint, according to Bloomberg, and the agency is asking questions about whether Nvidia makes it harder to switch to other suppliers of AI chips. Nvidia has more than 80% of the market for data center AI chips, according to industry estimates.
Nvidia’s huge rise in recent years has been directly tied to its dominance in AI chips for data centers, established years before competitors AMD and Intel started taking the category seriously. Nearly a decade ago, Nvidia developed a programming language for its chips, called CUDA, which is a key tool for engineers who train advanced AI models like the one at the heart of ChatGPT.
Many of Nvidia’s top customers are cloud companies as well as internet giants, including Microsoft, Alphabet, Meta, Amazon and Tesla.
As Nvidia’s AI chips have become a hot commodity, the company has released new enterprise software subscriptions and marketed its networking products as important complements to get the most out of its chips.
Recent versions of Nvidia’s chips can come pre-installed in entire Nvidia-designed server racks, an example of Nvidia’s effort to move from being a mere parts supplier to an entire systems provider.
A representative for Nvidia told CNBC that the company “wins on merit, as reflected in our benchmark results and value to customers, who can choose whatever solution is best for them.” The DOJ declined to comment to CNBC.
Every weekday the CNBC Investing Club with Jim Cramer holds a “Morning Meeting” livestream at 10:20 a.m. ET. Here’s a recap of Tuesday’s key moments. 1. The S & P Short Range Oscillator signaled a very overbought market even as the S & P 500 tracked modestly lower. We’ll see at the close whether the index’s eight-session winning streak will be broken. This is not a time to buy, Jim Cramer said. “You can only sell.” We trimmed Morgan Stanley after a nice run . On Monday, we exited Estee Lauder . After its recent rally and ahead of a baby formula trial, Jim suggested Abbott Laboratories could be trimmed. That gives us “optionality to buy Abbott if it goes down,” he added. Following solid earnings and a subsequent 8% stock rise, Jim said that trimming Palo Alto Networks might not be a bad idea, given its run higher. 2. Advanced Micro Devices rose another 1% on Tuesday, one day after announcing a deal to buy hyperscaler ZT Systems. The purpose of the deal is to expand its portfolio of AI chips and hardware to compete with fellow Club name Nvidia . “ZT makes it so they’re competitive. It’s a very important deal,” Jim explained. Investors are calling this acquisition an “acqui-hire” since AMD said plans to sell ZT’s manufacturing unit but retain 1,000 of its engineers. “They don’t have good training, meaning they need more data,” Jim added. “They need these engineers really badly.” 3. JPMorgan retail analyst Matthew Boss raised his price target on TJX Companies on Tuesday to $126 per share from $125. But he estimated that the end of TJX’s most recent quarter may not be that great. Jim agrees with Boss’ assessment. “You know I think it’s terrific,” Jim said, referring to TJX stock. But he added, “I would probably let some go if we weren’t restricted.” Shares of TJX, the off-price retailer behind T.J. Maxx, Marshalls, and HomeGoods, are up 20% year-to-date. (Jim Cramer’s Charitable Trust is long MS, ABT, AMD, TJX. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
The momentum in Japan markets were largely driven by the country’s technology and financial sector.
Doctoregg | Moment | Getty Images
Japan’s major indexes gained more than 2% on Tuesday as markets resumed trading after a holiday.
The benchmark Nikkei 225 jumped 2.72% higher and breached 36,000 for the first time since Aug. 2. The broader Topix gained 2.25%.
The momentum was largely driven by the country’s technology and financial sectors, with Rakuten Group and Trend Micro leaping more than 8% and 6%, respectively.
The country’s parliament plans to hold a special session next week to discuss the Bank of Japan’s decision to raise interest rates last month, Reuters reported, citing government sources.
South Korea’s Kospi dipped 0.2%, while the small-cap Kosdaq lost 1.57%.
Wages in Australia rose 0.8% in the quarter ended June, the slowest pace since the same quarter a year earlier, compared with estimates of a 0.9% rise. Wages rose 4.1% on an annual basis.
Hong Kong’s Hang Seng index kicked off the trading day with a 0.4% gain, while mainland China’s CSI 300 opened 0.06% higher.
In Southeast Asia, Singapore reported its economy grew 2.9% in the second quarter from a year ago, in line with the advance gross domestic product estimate released in July. The Ministry of Trade and Industry cited strength in the wholesale trade, finance and insurance as well as the information and communication sectors. The city-state also said it sees 2024 GDP growth of 2% to 3%, versus its previous forecast of 1% to 3%.
U.S. markets grappled with a choppy session overnight as investors braced for key inflation data.
The S&P 500 concluded the day flat at 5,344.39, while the tech-heavy Nasdaq Composite climbed 0.21% to close at 16,780.61, led by shares of Nvidia soaring 4%. On the flipside, the Dow Jones Industrial Average fell 140 points or 0.36% to conclude at 39,357.01.
Traders await Wednesday’s consumer price index for July, a key indicator of the health of the U.S. economy. Investors will analyze the data for indications the Federal Reserve can begin cutting rates in September.
—CNBC’s Brian Evans and Tanaya Macheel contributed to this report.
This week’s rout in chip stocks is a buying opportunity for investors, according to Citigroup. “We think it’s time to double down on Micron as we believe the [dynamic random access memory] market will remain tight given the oligopoly,” analyst Christopher Danely wrote in a 24-page report, calling the stock Citi’s top pick. Chip stocks sold off this week amid a broader reckoning in the outperforming technology sector since mid-June. That weakness accelerated on the heels of a slack July jobs reports Friday and a surprise rate hike from the Bank of Japan that led many investors to ditch the yen carry trade, buying the yen and selling the dollar. SMH 1M mountain VanEck Semiconductor ETF over the last month Danely also blamed disappointing results from semiconductor and semiconductor equipment companies as contributing to the pullback in the sector. The VanEck Semiconductor ETF has slumped 21% over the last month. The San Francisco-based analyst added that “very high” expectations at the peak meant the PHLX Semiconductor Sector Index was trading at a 70% premium to the S & P, its highest valuation since 2008. Earnings estimates for calendar 2025 also declined 11%, due in part from disappointing results from Intel , NXP Semiconductors and Microchip Technology . Along with Micron Technology , Danely named Advanced Micro Devices , Nvidia and Analog Devices among his top buy-rated names. “AI and memory still driving the bus – we’re still positive,” he wrote. “Fundamentals from the AI and memory end markets (roughly 30% of semi demand) remain robust with AI [capital expenditures] increasing and DRAM pricing already better than expected in 3Q24.”
Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street. Market slides : The S & P 500 gave back earlier gains and fell throughout Tuesday afternoon, led lower by the mega-cap tech stocks. Ahead of the post-Fed meeting news conference Wednesday afternoon, when central bank chief Jerome Powell is expected to signal interest rate cuts are coming, the market continued to toss out stocks of companies that don’t need lower rates to beat and raise. Investors instead kept buying stocks of companies whose prospects get a lot better in a lower-rate environment. In an example of this dynamic, Club name Nvidia doesn’t need rate cuts to spur demand for its artificial intelligence GPUs, but lower rates could create a windfall for Stanley Black & Decker if lower mortgage rates reignite sales of older homes that need repairs and remodeling. Nvidia dropped 5% on Tuesday. Stanley Black & Decker, also a portfolio holding, rose more than 9% in an earnings-driven rally that extended last week’s surge. We don’t know how long this rotation will last, but that’s what playing out right now. Banks shining : Lost in the shuffle of all the earnings earlier and another tech selloff was a bullish note on large-cap banks from Morgan Stanley analyst Betsy Graseck. We read Graseck carefully because of her previous big calls. Back in January, Graseck and her team upgraded their view on the large-cap banks to “attractive” and upgraded Citi , Goldman Sachs , and Bank of America to a buy-equivalent overweight. At the time, Morgan Stanley already had overweight ratings on Club name Wells Fargo and JPMorgan . It was a good call. Now, Graseck is back again raising price targets on nearly every bank in her coverage after second-quarter earnings. In her review of the quarter, she found that the capital markets rebound is only in its second inning, excess capital supports higher buybacks next year, and net interest income is starting to inflect for a handful of banks. Longer term, Grasck thinks the banks are skewing towards her “bull case” on lower expected credit losses. Up next: It’s a big night of earnings with Club names Microsoft , Advanced Micro Devices , and Starbucks scheduled to report. Some other names to watch are Arista Networks, Pinterest, First Solar, Caesars Entertainment, and Electronics Arts. Before Wednesday’s open, we get earnings from Club stocks GE Healthcare and DuPont . Boeing, Norwegian Cruise Line, Mastercard, Humana, Trane Technologies, and Kraft Heinz are also set to report. Club stock Meta Platforms is out with earnings after Wednesday’s close. (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street.
A man walks past a logo of SK Hynix at the lobby of the company’s Bundang office in Seongnam on January 29, 2021.
Jung Yeon-Je | AFP | Getty Images
SK Hynix, one of the world’s largest memory chipmakers, on Thursday said second-quarter profit hit its highest level in 6 years as it maintains its leadership in advanced memory chips critical for artificial intelligence computing.
Here are SK Hynix’s second-quarter results compared with LSEG SmartEstimate, which is weighted toward forecasts from analysts who are more consistently accurate:
Revenue: 16.42 trillion Korean won (about $11.86 billion), vs. 16.4 trillion Korean won
Operating profit: 5.47 trillion Korean won, vs. 5.4 trillion Korean won
Operating profit in the June quarter hit its highest level since the second quarter of 2018, rebounding from a loss of 2.88 trillion won in the same period a year ago.
Revenue from April to June increased 124.7% from 7.3 trillion won logged a year ago. This was the highest quarterly revenue ever in the firm’s history, according to LSEG data available since 2009.
SK Hynix on Thursday said that a continuous rise in overall prices of its memory products — thanks to strong demand for AI memory including high-bandwidth memory — led to a 32% increase in revenue compared with the previous quarter.
The South Korean giant supplies high-bandwidth memory chips catering to AI chipsets for companies like Nvidia.
Shares of SK Hynix fell as much as 7.81% Thursday morning.
The declines came as the South Korea’s Kospi index lost as much as 1.91% after U.S. tech stocks sold off overnight, following disappointing Alphabet and Tesla earnings. Those reports mark investors’ first look at how megacap companies fared during the second quarter.
“In the second half of this year, strong demand from AI servers are expected to continue as well as gradual recovery in conventional markets with the launch of AI-enabled PC and mobile devices,” the firm said in its earnings call on Thursday.
Capitalizing on the strong AI demand, SK Hynix plans to “continue its leadership in the HBM market by mass-producing 12-layer HBM3E products.”
Memory leaders like SK Hynix have been aggressively expanding HBM capacity to meet the booming demand for AI processors.
HBM requires more wafer capacity than regular dynamic random access memory products – a type of computer memory used to store data – which SK Hynix said is also struggling with tight supply.
“Investment needs are also rising to meet demand of conventional DRAM as well as HBM which requires more wafer capacity than regular DRAM. Therefore, this year’s capex level is expected to be higher than what we expected in the beginning of the year,” said SK Hynix.
“While overcapacity is expected to increase next year due to the increased industrial investment, a significant portion of it will be utilized to ramp up production of HBM. So the tight supply situation for conventional DRAM is likely to continue.”
SK Kim of Daiwa Capital Markets in a June 12 note said they expect “tight HBM and memory supply to persist until 2025 on a bottleneck in HBM production.”
“Accordingly, we expect a favourable price environment to continue and SK Hynix to record robust earnings in 2024-25, benefitting from its competitiveness in HBM for AI graphics processing unit and high-density enterprise SSD (eSSD) for AI-servers, leading to a rerating of the stock,” Kim said.
High-bandwidth memory chip supplies have been stretched thanks to explosive AI adoption fueled by large language models such as ChatGPT.
The AI boom is expected to keep supply of high-end memory chips tight this year, analysts have warned. SK Hynix and Micron in May said they are out of high-bandwidth memory chips for 2024, while the stock for 2025 is also nearly sold out.
Large language models require a lot of high-performance memory chips as such chips allow these models to remember details from past conversations and user preferences in order to generate humanlike responses.
SK Hynix has mostly led the high-bandwidth memory chip market, having been the sole supplier of HBM3 chips to Nvidia before rival Samsung reportedly cleared the tests for the use of its HBM3 chips in Nvidia processors for the Chinese market.
The firm said it expects to ship the next generation 12-layer HBM4 from the second half of 2025.
(Bloomberg) — The world’s largest technology companies got hammered as concern about tighter US restrictions on chip sales to China spurred a selloff in the industry that has led the bull market in stocks.
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From the US to Europe and Asia, chipmakers came under heavy pressure. American powerhouses Nvidia Corp., Advanced Micro Devices Inc. and Broadcom Inc. drove a closely watched semiconductor gauge down almost 7% — the most since 2020. Across the Atlantic, ASML Holding NV tumbled over 10% even after the Dutch giant reported strong orders. A plunge in Tokyo Electron Ltd. led the Nikkei 225 Stock Average lower.
Wednesday’s action reprised a recent trend in which capitalization-weighted indexes underperformed the average stock, a consequence of weakness in the megacaps that dominate them. With firms such as Apple Inc. and Microsoft Corp. each making up 7% of the S&P 500, losses are hard to offset even when most of the index’s constituents are up — as they were today.
The Biden administration told allies it’s considering severe curbs if companies like Tokyo Electron and ASML keep giving China access to advanced semiconductor technology. The US is also weighing more sanctions on specific Chinese chip firms linked to Huawei Technologies Co.
“This news on the chip front is the kind of UFO (UnForeseen Occurrence) that could indeed create the kind of selling that could be the catalyst for a tradable correction in the stock market,” said Matt Maley at Miller Tabak + Co. “Broad indices have become very overbought.”
The S&P 500 fell 1.4%. The Nasdaq 100 had its worst day since 2022. A gauge of the “Magnificent Seven” giant companies slipped 3.4%. The Russell 2000 of small firms dropped 1.1%. Wall Street’s “fear gauge” — the VIX — hit the highest since early May. In late hours, United Airlines Holdings Inc. sank on a bearish outlook.
A pair of chipmakers defied the selloff: Intel Corp. and Globalfoundries Inc. And the Dow Jones Industrial Average climbed for a sixth straight day — notching another record. Financial shares outperformed, with U.S. Bancorp surging on solid results.
The bond market saw small moves. The Federal Reserve’s Beige Book showed slight economic growth and cooling inflation. The most-notable speaker on Wednesday was Governor Christopher Waller, who said the Fed is getting “closer” to cutting rates, but is not there yet. The yen led gains in major currencies, up almost 1.5%.
The Biden administration is in a tenuous position. US companies feel that restrictions on exports to China have unfairly punished them and are pushing for changes. Allies, meanwhile, see little reason to alter their policies when the presidential election is just a few months away.
“Normally, the impact of these types of headlines isn’t long-lasting, but in this case, we would note that semis have been underperforming the broader market for the last couple of weeks now,” said Bespoke Investment Group strategists. “So that’s something to watch.”
The tech underperformance is coming after a first half which saw megacaps like Nvidia, Microsoft Corp. and Alphabet Inc. propel the market higher, stretching valuations for these names and leaving them with a tougher setup for the rest of 2024.
Can the market keep powering ahead without tech?
“Much of this year’s equity gains have come from a handful of names currently under direct threat from the political arena,” said Jose Torres at Interactive Brokers. “An important question is if the rest of the market, which generally lacks thrilling tales on a relative basis, can offset the waning momentum in ‘Magnificent Seven’ stocks.”
At Goldman Sachs Group Inc., Scott Rubner says “I am not buying the dip.”
The tactical strategist bets the S&P 500 has nowhere to go from here but down. That’s because this Wednesday, July 17, has historically marked a turning point for returns on the equity benchmark, he said, citing data going back to 1928. And what follows, he says, is August — typically the worst month for outflows from passive equity and mutual funds.
Jonathan Krinsky at BTIG says the market is “nearing the end of the typical bullish window.”
Sentiment remains extremely complacent on the surveys and transactional indicators, he noted.
“While the rotation out of megacap tech into cyclicals and small-caps is encouraging, it felt a bit forced happening in such a short period of time,” Krinsky said. “Even if this is going to be a more long-lasting rotation, we likely won’t be able to see that new leadership until after we see a higher correlation correction and then see what leads coming out of that.”
Corporate Highlights:
Tesla Inc. forming an autonomous taxi platform will be the catalyst for a roughly 10-fold increase in its share price, Ark Investment Management LLC’s Cathie Wood said, echoing years of bullish predictions about a business the carmaker has yet to stand up.
Amazon.com Inc.’s marketing portal for merchants crashed Tuesday night, according to multiple Amazon sellers and consultants, fouling up one of the online retailer’s biggest sales of the year.
Morgan Stanley became the latest big Wall Street bank to tap the US investment-grade market Wednesday after reporting earnings, as strong investor demand helps lenders borrow at lower yields than would have been possible at the start of the month.
Johnson & Johnson’s second-quarter profit beat Wall Street projections on strong pharmaceutical sales, while the company cut its full-year forecast to account for a spate of recent acquisitions.
Key events this week:
ECB rate decision, Thursday
US initial jobless claims, Philadelphia Fed manufacturing, Conference Board LEI, Thursday
Fed’s Mary Daly, Lorie Logan and Michelle Bowman speak, Thursday
Fed’s John Williams, Raphael Bostic speak, Friday
Some of the main moves in markets:
Stocks
The S&P 500 fell 1.4% as of 4 p.m. New York time
The Nasdaq 100 fell 2.9%
The Dow Jones Industrial Average rose 0.6%
The MSCI World Index fell 0.9%
Currencies
The Bloomberg Dollar Spot Index fell 0.3%
The euro rose 0.3% to $1.0936
The British pound rose 0.3% to $1.3008
The Japanese yen rose 1.4% to 156.19 per dollar
Cryptocurrencies
Bitcoin fell 0.1% to $64,610.01
Ether fell 0.7% to $3,416.9
Bonds
The yield on 10-year Treasuries was little changed at 4.15%
Germany’s 10-year yield was little changed at 2.42%
Britain’s 10-year yield advanced three basis points to 4.08%
Commodities
West Texas Intermediate crude rose 2.6% to $82.89 a barrel
Spot gold fell 0.4% to $2,457.97 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Cecile Gutscher and Sujata Rao.
Every weekday the CNBC Investing Club with Jim Cramer holds a “Morning Meeting” livestream at 10:20 a.m. ET. Here’s a recap of Friday’s key moments. U.S. stocks advanced Friday as the S & P 500 rebounded from its worst trading session since late April. The benchmark gauge broke its seven-day win streak Thursday as investors rotated out of Big Tech names into smaller-cap stocks, sending many Club holdings down, including Nvidia ‘s 5% drop. Shares of the chipmaker gained more than 2% on Friday. June’s hotter-than-expected producer price index print ran counter to Thursday’s consumer price index (CPI) data that showing inflation easing, but it shouldn’t change rate cut expectations for September. The Dow returned to record territory and topped 40,000 once again. Wells Fargo stock tumbled 7% after the bank’s second-quarter report despite beats on revenue and earnings. The market’s focus is instead on net interest income (NII), which came in worse than expected. Investors wanted to see management improve it full-year forecast FOR NII — a key gauge of the bank’s lending and borrowing activities — but higher funding costs and lower loan balances are weighing on profits. We’re not concerned about the stock’s move lower or the results, however, because Wells Fargo’s push into fee-based businesses like investment banking look promising. Rather, this looks like a sell-the-news event, given that Wells Fargo shares rose into the quarterly print. We’ll have the full Club analysis on results later Friday. Morgan Stanley and Abbott Laboratories will post earnings next week on Tuesday and Thursday, respectively. Capital markets were strong for other bank earnings on Friday, which could serve as a good read-through for Morgan Stanley’s investment banking business. We expect solid results from Abbott Labs as well after the company beat and raised its outlook in the first quarter. However, the ongoing trial regarding Abbott’s premature infant formula remains an overhang for the stock. (Jim Cramer’s Charitable Trust is long WFC, MS, ABT, NVDA. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Before co-founding biotech startup Inceptive, Jakob Uszkoreit had an idea that would eventually make generative artificial intelligence possible. As a researcher at Google in 2017, Uszkoreit was trying to speed up the training of neural networks.
He suggested using a new way to interpret data called self-attention. That idea gave way to the transformer, the neural network architecture that underpins generative AI.
“There are actually applications, for example at Google and other places, where transformers have been deployed in production long before, but to much, much less fanfare,” Uszkoreit told CNBC in an interview in June. He said OpenAI’s ChatGPT, which was launched in late 2022, shined “the spotlight on these applications.”
The transformer idea was published by Uszkoreit and seven other Google researchers in the 2017 “Attention Is All You Need” paper. All eight authors have since left Google.
“Maybe Google here hasn’t been able to be as daring as, you know, a much, much smaller company such as OpenAI when it comes to applying this technology to quite different types of products,” Uszkoreit said. “This is something that we fundamentally have to accept and actually, in a certain sense, be maybe even grateful for because Google is providing something to the world that we all rely on day to day.”
Inceptive Co-Founder and CEO Jakob Uszkoreit is working on tranforming the way drugs work using generative AI
Inceptive
Uszkoreit left Google in 2021 to co-found Inceptive, which he describes as a a biological software company. In September, Inceptive raised $100 million in a funding round led by Andreessen Horowitz and Nvidia in an attempt to apply AI to drug development.
“We’re starting with a focus on RNA, whose exact composition has been designed with generative artificial intelligence, such that these molecules inside certain biological systems exhibit behaviors that ultimately are native to those systems,” Uszkoreit said. “There’s actually this promise of a flavor of medicine that is in much greater harmony with living systems than most existing medicines.”
Watch the video to hear the full conversation between CNBC’s Katie Tarasov and Inceptive CEO Jakob Uszkoreit.
The S&P 500 hit a fresh new milestone on Wednesday, closing above 5,600 for the first time ever thanks to a rise in semiconductor stocks. The broad market index jumped 1.02%, and marked a seventh straight day of gains. The Nasdaq Composite, meanwhile, climbed 1.18% and also hit a new all-time high, while the Dow Jones Industrial Average joined the trend, adding 429.39 points, or 1.09%. Chip stocks led the day, with Taiwan Semiconductor rising 3.5% and Nvidia adding 2.7%, while Qualcomm and Broadcom rose about 0.8% and 0.7%, respectively. Follow live market updates.
Delta shares tumbled nearly 10% in premarket trading Thursday morning after the airline kicked off earnings season with a forecast that fell short of analysts’ estimates. Delta forecast record revenue for the third quarter, thanks to booming summer travel demand, but it expects to grow its flying capacity by 5% to 6% compared with last year, slower than the 8% it had expected in the second quarter. Airlines are seeing travel demand break records, but profits have lagged as the industry faces higher costs. Meanwhile, Delta also reported earnings in line with expectations and adjusted revenue of $15.41 billion, slightly less than the $15.45 billion expected, based on consensus estimates from LSEG.
An attendee films Samsung Electronics’ Galaxy Smart Ring during its unveiling ceremony in Seoul, South Korea, July 8, 2024.
Kim Hong-ji | Reuters
Samsung wants to put a ring on it. The tech giant launched the Galaxy Ring on Wednesday, a lightweight “smart ring” equipped with sensors designed for health monitoring 24 hours a day. The ring starts at $399.99. The announcement follows rival Apple‘s push into that space and comes as users hold onto smartphones for longer, inspiring device makers to look for add-on electronics products. Among other things, Samsung also unveiled its latest foldable smartphones, which are packed with AI features, at an event in Paris. The Samsung Galaxy Z Fold6 starts at $1,899.99 and opens like a book to have a bigger screen, while the Z Flip6 is a more traditional flip phone with a bendable screen and starts at $1,099.99.
Shares of software company Hubspot plunged 12% Wednesday after Bloomberg reported that Google parent Alphabet has shelved plans to buy the company. Alphabet expressed its interest in a deal earlier this year, “but the sides didn’t reach a point of detailed discussions about due diligence,” according to the report, which cited people with knowledge of the matter. Hubspot, which makes software that other companies use to automate marketing and reach prospective customers, has reported strong revenue growth and sales in recent quarters. An acquisition would have helped Google grow revenue from its business software and cloud infrastructure, but U.S. regulators have been pushing back on deals involving Big Tech companies.
Customers enter a Costco Wholesale Corp. warehouse store in Hawthorne, California, on June 12, 2024.
Patrick T. Fallon | Afp | Getty Images
Costco is going to cost more. The retailer said Wednesday that the price of a standard annual membership would rise by $5, to $65 from $60, in the U.S. and Canada starting Sept. 1. The higher tier of its membership, the “Executive Plan” would increase by $10, to $130 a year from $120. It’s the first time in seven years that Costco has raised its membership fees and has delayed its usual timeline of upping the price every five and a half years as consumers dealt with high inflation.
— CNBC’s Brian Evans, Leslie Josephs, Arjun Kharpal, Jordan Novet, Jennifer Elias and Melissa Repko contributed to this report.
— Follow broader market action like a pro on CNBC Pro.
(This is CNBC Pro’s live coverage of Tuesday’s analyst calls and Wall Street chatter. Please refresh every 20-30 minutes to view the latest posts.) A streaming giant and a semiconductor maker were among the stocks being talked about by analysts on Tuesday. TD Cowen raised its price target on Netflix, calling for 13% upside for the stock. Meanwhile, KeyBanc hiked its Nvidia target to $180, implying upside of 40%. Check out the latest calls and chatter below. All times ET. 6:02 a.m.: Bank of America lifts credit rating for Devon Energy to overweight upon latest acquisition Bank of America views Devon Energy’s newest acquisition as a positive sign for its credit story. The bank upgraded the energy company’s credit rating to overweight rating from market weight upon Monday’s announcement that Devon Energy was planning to acquire Grayson Mill Energy’s Williston basin business in a $5 billion deal. “Fundamentally, we view the deal positively as it increases DVN’s scale / margin profile in the Williston basin while also providing diversification away from the Permian basin (where DVN’s production is concentrated),” wrote analyst Daniel Lungo. To finance the deal, the analyst expects the company to issue between $1 billion and $1.5 billion of long-term debt, and around $1.5 billion of term loans. He cited this enhanced liquidity as one catalyst for the stock, alongside a deleveraging outlook and improved fundamentals. “We think the most important impact from the transaction will be the potential new issuance of benchmark bonds which would enhance liquidity in DVN’s outstanding notes, helping bonds trade tighter (in our view), given the company’s current relatively off-the-run illiquid nature,” the analyst said. “We also think this announcement removes some risk that DVN could participate in a larger scale / more levering transaction, which we view positively for its credit story.” Shares of Devon Energy ended Monday’s session 1% lower and have overall added 2% this year. — Lisa Kailai Han 5:50 a.m.: Piper Sandler upgrades Bank of America to neutral Bank of America could get a boost on the back of its upcoming earnings results, according to Piper Sandler. Analyst R. Scott Siefers upgraded the bank to neutral from underweight. The analyst also raised his price target to $42 from $37, indicating a potential 3% upside from the stock’s Monday afternoon close. “We still see better opportunity in peers C and JPM, which are both OW rated. But with BAC’s NII likely to trough this Q and then begin a more powerful inflection upward, we no longer see compelling reason to single out the name for underperformance,” Siefers wrote. Shares of Bank of America have rallied 21% this year. JPMorgan Chase has added the same amount, while Citigroup stock is up 26% year to date. With net interest income flatlining around $13.9 billion in the second quarter of this year, Siefers predicts this measure could leap to between $14.5 billion and $14.6 billion by year-end. “BAC is certainly among the industry leaders here,” the analyst added. “Given the combination of its scale benefits and now-inflecting NII, we simply think it’s appropriate to ascribe a higher multiple to the shares than we have assumed previously.” Bank of America is due to report earnings July 16. — Lisa Kailai Han 5:44 a.m.: TD Cowen lifts Netflix price target ahead of second-quarter earnings announcement TD Cowen expects more gains ahead for Netflix . Analyst John Blackledge raised his price target for the stock to $775 from $725, while maintaining his buy rating on the stock. The new target points to 13% upside from Monday’s close. The increase comes ahead of Netflix’s second-quarter earnings report which is slated for next week. “We think Netflix’s broad catalog across multiple genres creates a durable advantage over time,” the analyst said, noting that TD Cowen’s second-quarter consumer survey showed Netflix as still taking to top spot for living room viewing. Besides the company’s second-quarter earnings and third-quarter outlook, Blackledge also cited paid sharing initiatives and Netflix’s ad-supported tier as near-term catalysts. “Any further pricing increases in one of the company’s major markets could also act as a catalyst,” he added. Netflix has rallied 41% this year. NFLX YTD mountain NFLX year to date — Lisa Kailai Han 5:44 a.m.: KeyBanc hikes Nvidia price target The good times for Nvidia are not over yet, according to KeyBanc. Analyst John Vinh raised his price target on the semiconductor stock to $180 from $130. The new forecast implies upside of 40% from Monday’s close. “Positive takeaways for NVDA include: 1) despite the impending launch of Blackwell in 2H24, we are not seeing any signs of a demand pause as demand for H100 remains robust, as we continue to see rush orders; and 2) the interest and demand in GB200 is greater than we initially had sized,” he said in a note to clients. Nvidia has been a market stalwart this year, with shares rallying 158.9% as enthusiasm around artificial intelligence shows no signs of easing. NVDA YTD mountain NVDA year to date KeyBanc isn’t the only firm getting more bullish on Nvidia. Wolfe Research and UBS recently increased their targets on Nvidia to $150 each. — Fred Imbert
A block of industrial factories sits among newer apartment buildings along a canal in Tokyo, Japan.
Photo By Michael Russell | Moment | Getty Images
Asia-Pacific markets opened higher on Wednesday, after U.S. Federal Reserve Chair Jerome Powell noted progress on inflation, but reiterated patience on cutting rates at a central banking forum.
Traders in Asia await June business activity data from India, Japan and China which is set for release later in the day.
Japan’s Nikkei 225 was up 0.45% extending its run above the 40,000 mark, while the broad-based Topix was up 0.11%.
South Korea’s Kospi started the morning up 0.50%, while the Kosdaq Index rose 0.8%.
Australia’s S&P/ASX 200 opened up 0.17% in early trade.
Hong Kong Hang Seng index futures were at 17,764, lower than the HSI’s last close of 17,769.14.
Every weekday the CNBC Investing Club with Jim Cramer holds a “Morning Meeting” livestream at 10:20 a.m. ET. Here’s a recap of Monday’s key moments. U.S. stocks kicked off the first trading session of the second half of 2024 with slight gains. Meta Platforms was the portfolio’s biggest laggard on Monday, down 1.5% after the opening bell. Raymond James raised Meta’s price target to $600 apiece from $550, implying a more than 19% upside from Friday’s close. The analysts said the Facebook and Instagram parent’s capital expenditures could amount to an estimated $50 billion in 2025 in order to support its artificial intelligence efforts. Investors seem to be weighing if these massive bets on the nascent but fast-growing tech are worth it. The Club says they will be, given the monetization opportunities AI brings to Meta’s advertising business. Shares of Morgan Stanley and Wells Fargo climbed 1% and 0.7%, respectively, after the banks announced a boost to their dividend payouts Friday evening. The news follows the Federal Reserve’s annual stress tests results last week, which both our financial names passed with ease. Morgan Stanley raised its dividend by 8.8% and authorized a $20 billion repurchase plan, while Wells boosted its dividend by 14%, but did not give firm details on its buyback plans. Barclays laid out a case for Abbott Labs stock to bounce back after the company’s latest trial over allegations that its formula may cause necrotizing enterocolitis in infants, which begins July 8. Abbott has lost nearly $30 billion in market cap since peer Reckitt Benckiser’s $60 million verdict in mid-March over similar matters. But the Wall Street analysts said that if the outcome is substantially below Reckitt’s figure, investors could come back to the stock. We’re not making light of the terrible situation, but are pointing out that Abbott’s fundamentals are still solid. Just look at the medical device maker’s beat and raise last quarter. (Jim Cramer’s Charitable Trust is long META, WFC, MS, ABT. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
The Dow Jones Industrial Average rose about 3.8% in the first six months of the year, lagging way behind the Nasdaq, up 18.1%, and the S&P 500, which jumped 14.5% — as investors plowed into artificial intelligence-related stocks.
Brendan Mcdermid | Reuters
This report is from today’s CNBC Daily Open, our 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.
Boeing ‘guilty plea’ U.S. prosecutors plan to seek a guilty plea from Boeing over a charge related to two fatal 737 Max crashes in 2018 and 2019, attorneys for the victims’ family members said. The Justice Department is reviewing whether Boeing violated a 2021 settlement that shielded the company from federal charges. Boeing agreed then to pay a $2.5 billion penalty for a conspiracy charge tied to the crashes. The DOJ revisited the agreement after a door panel blew out of a new 737 Max 9 in January, sparking a new safety crisis.
Under fire Nike CEO John Donahoe faces growing discontent as the company’s stock plummeted 20% on Friday, its worst day since 1980, after forecasting a significant decline in sales. As Wall Street digested the dismal outlook from the world’s largest sportswear company, at least six investment banks downgraded Nike’s stock. Analysts at Morgan Stanley and Stifel took it a step further, specifically calling the company’s management into question.
Bitcoin windfall Mt. Gox, a bankrupt Japanese bitcoin exchange, is set to repay creditors nearly $9 billion worth of Bitcoin following a 2011 hack. The court-appointed trustee overseeing the exchange’s bankruptcy proceedings said distributions to the firm’s roughly 20,000 creditors would begin this month. The payout is likely to be a windfall for those who waited a decade, with Bitcoin’s value surging from around $600 in 2014 to over $60,000 today. One claimant, Gregory Greene, could potentially receive $2.5 million for his $25,000 investment.
Inflation cooling A key inflation measure, watched closely by the Federal Reserve, slowed to its lowest annual rate in over three years in May, with the core personal consumption expenditures price index rising 2.6% from a year ago. “This is just additional news that monetary policy is working, inflation is gradually cooling,” San Francisco Fed President Mary Daly told CNBC’s Andrew Ross Sorkin during a “Squawk Box” interview. “That’s a relief for businesses and households who have been struggling with persistently high inflation. It’s good news for how policy is working.”
[PRO] Rally will broaden The tech sector has driven market performance in 2024, with the S&P 500 tech group up 28% and Nvidia soaring 149%, while small-caps have lagged. Oppenheimer’s chief market strategist John Stoltzfus believes the rally will broaden. CNBC’s Lisa Kailai Han looks at the reasons behind his call.
It's a busy political environment for markets to navigate. Wall Street has shown remarkable resilience thanks to the AI-powered rally in the first half of the year, which has seen the Nasdaq soar 18% so far. Nvidia is up almost 150%. There could be more to come; Bank of America believes Nvidia and Apple could still deliver "superior returns."
John Donahoe was brought in from eBay to transform the athletic apparel giant's digital channels. The company ditched its retail partners, became too dependent on its aging sneaker ranges and lost ground to new contenders Hoka and On. It'll certainly make an interesting case study for MBA programs for all the wrong reasons. As Wall Street questioned Donahoe's position, he still had the approval of its founder.
Friday also saw the Fed's favored inflation measure come in line with expectations, raising the prospect of interest rate cuts later this year.
"I really think the Fed should tee up a cut at the July 31 meeting, confirm it at Jackson Hole in August and do it in September," Wharton finance professor Jeremy Siegel told CNBC's "Squawk on the Street." He added that one or maybe one-and-a-half rate cuts have already been priced in.
"I actually think there will be more because there might be a little bit more softness in the economy and better inflation numbers, both of those feeding better rates," he continued. Siegel also said it is "hard to say" where the bull market's trajectory currently stands.
In a four-day trading week — markets are closed for the July 4 Independence Day holiday — the big economic number to watch is the June jobless data on Friday. CNBC's Sarah Min has more on what to expect.
— CNBC's Lisa Kailai Han, Yun Li, Jeff Cox, Leslie Josephs, Gabrielle Fonrouge, Hakyung Kim, Brian Evans, Spencer Kimball, Ryan Browne and MacKenzie Sigalos contributed to this report.
A trader works on the floor of the New York Stock Exchange (NYSE) during morning trading on March 4, 2024 in New York City.
Angela Weiss | Afp | Getty Images
This report is from today’s CNBC Daily Open, our 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.
Micron slides Shares of Micron fell almost 8% in extended trading on Wednesday as its revenue forecast failed to top analysts’ expectations. The computer memory and storage maker expects revenue of $7.6 billion in the current quarter, in line with estimates. Micron’s shares have doubled in the past year as its most advanced memory is needed for AI graphics processing units. CEO Sanjay Mehrotra said the company’s AI-oriented products were likely to increase in price and its data center business grew 50% on a quarter-to-quarter basis.
$2,000,000,000,000 Amazon‘s market capitalization surpassed $2 trillion for the first time on Wednesday, joining the ranks of tech giants like Apple and Microsoft. The surge in megacap tech stocks has been driven by investor excitement around generative AI. Amazon’s stock has risen 26% this year, outpacing the Nasdaq’s 18% increase. The stock rose 3.9% on Wednesday. Separately, CNBC’s Annie Palmer reports Amazon plans to launch a discount store in bid to fend off Temu and Shein.
Southwest cuts guidance Southwest Airlinescut its second-quarter revenue forecast due to difficulties adapting its revenue management to recent booking trends. Despite the revised outlook, the airline still expects record quarterly operating revenue. Activist investor Elliott Management reiterated calls for leadership changes, “Southwest is led by a team that has proven unable to adapt to the modern airline industry.” Higher costs and increased capacity have impacted fares and profits across the industry, while competitors like Delta and United have benefited from the return of international travel. Southwest shares fell 4% before recovering to end the session just 0.2% lower.
Asian stocks fall, yen weakens Japan’s export-heavy Nikkei 225 and the broad-based Topix fell as the yenweakened to a 38-year low against the U.S. dollar, raising the prospect of intervention. Finance Minister Shunichi Suzuki warned the country was “deeply concerned about FX impact on economy,” per Reuters. Elsewhere, Hong Kong’s Hang Seng index led the rest of the Asia-Pacific region lower, tumbling 2%, and mainland China’s CSI 300 was down 0.6%. Australia’s S&P/ASX 200 dropped 0.58% and South Korea’s Kospi dipped 0.37%
[PRO] Investing in India India’s unexpected election results haven’t dampened Causeway Capital Management’s bullish outlook. Although portfolio manager Arjun Jayaraman predicts modest short-term returns for the BSE Sensex index, he suggests ETFs that could benefit from higher returns.
There was a surge of activity in the auto industry that may have been overshadowed by Volkswagen's $5 billion investment in the loss-making EV maker Rivian. While VW makes solid cars, its electric vehicles are plagued with glitchy software. As CNBC's Sophie Kiderlin notes this investment will take years to yield returns. Analysts, however, are wary of the current "EV winter" marked by tepid demand and increased competition. Despite these challenges, Rivian's stock surged 23%, reflecting investor optimism.
Elsewhere in the industry, Waymo, Alphabet's self-driving car unit, expanded its robotaxi service to all users in San Francisco. Meanwhile, General Motors's Cruise autonomous vehicle division appointed former Amazon and Microsoft executive Marc Whitten as its new CEO. This leadership change follows a series of collisions that led to investigations and the suspension of Cruise's license in California, heightening public skepticism about driverless technology.
While Waymo is steadily rolling out its services and Cruise is restarting its operations, Tesla has yet to introduce its long-promised robotaxi. Elon Musk's projections for a 2020 launch and fully autonomous driving by 2018 have yet to materialize. Nevertheless, Musk envisions Tesla as a potential $7 trillion robotaxi enterprise. The unveiling of Tesla's robotaxi on Aug. 8 will be closely watched to gauge its competitive edge.
Rivian shareholder Amazon joined the exclusive $2 trillion market cap club, alongside Alphabet, Nvidia, Apple and Microsoft. This milestone comes as Amazon aggressively cuts costs.
While enthusiasm for AI remains high, Wall Street experienced a more measured session as investors sought to lock in profits from the Nvidia-driven surge. Despite the current optimism, strategists caution that the S&P 500 might face a correction over the summer. CNBC's Sarah Min explores the factors behind Citi's projections and a series of recent upgrades.
— CNBC's Hakyung Kim, Brian Evans, Alex Sherman, Samantha Subin, Annie Palmer, Ece Yildirim, Michael Wayland, Sophie Kiderlin, Spencer Kimball, Leslie Josephs, Sarah Min, Sheila Chiang and Lim Hui Jie contributed to this report.
Sydney Harbour taking in the Harbour Bridge, Opera House and ferries at sunrise during the COVID-19 pandemic on April 20, 2020 in Sydney, Australia.
James D. Morgan | Getty Images News | Getty Images
Asia-Pacific markets mostly rose Wednesday as investors anticipate Australia’s inflation numbers for May and Singapore’s May manufacturing output data.
Australia’s core inflation rate is expected to come in at 3.8% in May, according to a Reuters poll of economists. This is higher than the 3.6% recorded in April.
Should inflation come in higher than expected and spur the Reserve Bank of Australia to raise rates, it would be the first major Asia-Pacific central bank to do so in an environment where investors are waiting for rate cuts, barring Japan. RBA Governor Michelle Bullock recently revealed the central bank discussed hiking rates at its last meeting.
The RBA has two inflation readings to consider — June 26 and July 31— before its next meeting on Aug. 6.
Singapore’s May factory output will also be released Wednesday, with a Reuters poll of economists predicting a 2% year-on-year growth rate, as compared to a 1.6% decline recorded in April.
Japan’s Nikkei 225 gained 0.50% in morning trade while the broad-based Topix was up marginally. South Korea’s Kospi gained 0.16% while the small-cap Kosdaq traded close to the flatline.
Hong Kong Hang Seng index futures were at 17,958, lower than the HSI’s last close of 18,072.9.
Overnight in the U.S., the Dow Jones Industrial Average declined, shedding 0.76% and closing at 39,112.16. Led by an Nvidia rebound, the broad market S&P 500 added 0.39% while the Nasdaq Composite advanced 1.26%, with both indexes ending three-day losing streaks.
— CNBC’s Hakyung Kim and Samantha Subin contributed to this report.
