It was a muted day in the market as interest rates continued higher while stocks bounced to end their multi-day losing streak. Let’s see what else you missed. 👀
Today’s issue covers the artificial intelligence (AI) hype train continuing, base metal blues, and more from the day. 📰
Here’s today’s heat map:
8 of 11 sectors closed green. Energy (+1.25%) led, & consumer staples (-0.36%) lagged. 💚
Interest rates continue to rise in the U.S., Moody’s warning that a government shutdown could hurt the country’s credit rating. It’s the last of the big three credit rating firms that still gives the U.S. a “triple-A” rating. ⚠️
The debt restructuring struggles continue for Chinese property developer Evergrande. Its shares plummeted after missing payments on $547 million in onshore bonds and delaying a debt restructuring meeting scheduled for today. 💵
Media stocks caught a bid on news that striking Hollywood writers have reached a tentative deal with studios. The Writers Guild of America (WGA) leaders are working to approve the 3-year contract, which they say provides meaningful gains and protections. However, Hollywood is not out of the woods yet, as it’s still waiting for a SAG-AFTRA actors’ deal to be struck. 📝
Electric vehicle maker Nio plunged 6% before regaining most of that decline after the company denied rumors it was considering raising $3 billion from investors. And Li Auto shares fell 10% after telecom giant Huawei teased its first sedan and high-end SUV, entering the competitive market. ⚡
Home goods company Williams-Sonoma soared 12% after Green Equity Investors disclosed a 5% stake in the company. 🛋️
In crypto news, MicroStrategy reportedly bought $147 million worth of Bitcoin in August, raising its stake to 158,000. Meanwhile, hackers stole $200 million from Hong Kong-based crypto company Mixin, causing the network to suspend services. ₿
Here are the closing prices:
If you opened Google News this morning and switched to the business tab, you saw a lot of AI news. 🙄
Whether it’s a good day in the market. A bad day in the market. Or a “meh” day in the market. Artificial intelligence (AI) continues to reign supreme. Let’s review some of the top headlines from today so you’re all caught up. 👇
First up is Amazon, investing up to $4 billion in artificial intelligence firm Anthropic, a rival to OpenAI. The company was founded about two years ago by former OpenAI research executives and recently debuted its AI chatbot called Claude 2.
Amazon is looking to position itself as the one-stop shop for AI, designing its own chips for training huge AI models. Amazon Bedrock customers can also create their own generative AI applications on Amazon Cloud, and the company also sells its own AI applications. 🌥️
Its minority ownership stake creates a strategic collaboration to advance generative AI, with the startup using Amazon Web Services as its primary cloud provider. It will also use custom AWS-designed semiconductors to train its foundational models that create its AI applications. Meanwhile, AWS customers will receive early access to unique features for model customization and fine-tuning.
Next up is Wall Street going all in on Microsoft, as Guggenheim becomes the last analyst to move its sell rating on the stock up to neutral. As for the catalyst, it cited that generative AI is “too positive a force to contend with…” though it remains unclear how much monetization it will drive and when.
Roughly 90% of the analysts tracked by Bloomberg have a buy rating on Microsoft, while the rest have a hold rating. Those are some big shoes to fill for a stock that’s had a strong 2023 so far. 🔺
Meanwhile, Snapchat found a new advertising partner in Microsoft for the ads it’s using in its AI products. The “Microsoft Advertising’s Ads for Chat API” will allow Snap’s “Sponsored Links” to connect users with relevant partners related to their conversation, allowing advertisers to reach customers right as they’re showing interest in their product or service.
And lastly, Getty Images has created an AI image generator that uses only its licensed images. Through its development partnership with Nvidia, it’s hoping this product can help tackle the copyright and ownership concerns that have plagued the AI content space so far. The company was previously at the center of this controversy, suing Stability AI for using its images without permission in its image generator called “Stable Diffusion.” 🖼️
Rain or shine, AI is on the mind. We will continue to keep you updated as more news rolls in. 👍
The world’s eighth-largest aluminum maker, Alcoa, threw investors for a loop on Monday, unexpectedly announcing a new chief executive officer (CEO). 😮
Roy Harvey has led the company since November 2016, when it went public, and will remain a strategic adviser until the end of 2023. He’ll be replaced by William Oplinger, who has served as executive vice president and chief operations officer (COO) since February of this year.
Although the company says this reflects its “succession planning process,” the market seemingly did not expect a change. However, it’ll likely have to wait until the company reports third-quarter results in mid-October for more color on the change and potential impacts. 📝
$AA shares fell 6% on the day to fresh 2.5-year lows. It has now given back 70% of its October 2020 to March 2022 gains. 😬
Other companies in its space have not fared particularly well this year either. Although the commodity sector has performed well in aggregate, most of the strength has come from energy and agriculture. The chart below shows the base metals ETF lagging its peers year-to-date, falling nearly 5%. 📉
We’ll have to wait and see if things improve. However, the global economy slowing down will remain a headwind for the group, including copper, aluminum, and zinc. 🤷
Bullets From The Day:
🔋 Nissan is the latest automaker to tout its all-electric plans in Europe. The Japanese carmaker will press ahead with its existing target despite the U.K. pushing back its ban on selling new gasoline and diesel cars from 2030 to 2035. Currently, more than one-third of the over 1 million electric vehicles it’s sold worldwide have been in Europe. It’s also planning to introduce cobalt-free technology to reduce the cost of EV batteries by 65% by fiscal 2028. CNBC has more.
🪙 Reddit will allow users to “cash out” their platform gold for real money. The social media platform’s new “contributor program” will enable users to turn Reddit gold rewarded for their posts into real-world currency. Users purchase Reddit Gold through six options, starting at $1.99 to buy one gold and $49 for 25 gold. And the users they give gold to will receive 90 cents for every gold earned, while “top contributors” will receive $1 for every gold they earn. It’s essentially a form of revenue sharing to help promote quality activity on the site. More from The Verge.
⛽ FAA puts a bounty on sustainable fuel development. The Federal Aviation Administration (FAA) has opened up a multimillion-dollar grant program to accelerate the sustainable aviation fuel (SAF) rollout. The Biden Administration is trying to reach net-zero aviation emissions by 2050, but zero-emissions aircraft are far off. As a result, companies are investing heavily in fuels made from cooking oil, municipal waste, and other recyclable or reusable resources. Axios has more.
🚀 Sierra Space raises $300 million at a $5 billion valuation. The subsidiary of private aerospace contractor Sierra Nevada Corporation is raising a new round of funding led by Japanese investors MUFG, Kanematsu, and Tokio Marine, with Citigroup advising on the deal. Two years ago, it raised $1.4 billion at a $4.5 billion valuation but will use the fresh cash to bring its Dream Chaser spaceplane closer to flying. Its goal is ultimately to deliver cargo and crew to low Earth orbit using a reusable vehicle, resembling a miniature NASA Space Shuttle in appearance. More from CNBC.
👨⚕️ Costco makes its healthcare push by partnering with DTC marketplace Sesame. The retailer will now offer members online health checkups for as low as $29, partnering with Sesame to connect medical providers nationwide with consumers. However, Sesame doesn’t accept health insurance because it primarily caters to uninsured Americans and those with high-deductible plans who prefer to pay for their health care in cash. It says its model is designed to keep service prices low for its users. Costco joins Amazon, Walmart, and the slew of other retailers moving directly into healthcare. CNN Business has more.