US Stock Market Ends Down, Tech-Focused Shares Lead the Way Lower
On Wednesday, US stocks ended down, erasing most of the gains from the previous session. The tech-focused stocks led the way lower, with Alphabet Inc's shares falling 7.7% after its new AI chatbot gave an incorrect answer in an online advertisement. Federal Reserve officials also said more interest rate rises are in the cards as the US central bank moves ahead with efforts to control inflation.
The Dow Jones Industrial Average fell 207.68 points, or 0.61%, to 33,949.01, the S&P 500 lost 46.14 points, or 1.11%, to 4,117.86 and the Nasdaq Composite dropped 203.27 points, or 1.68%, to 11,910.52. All of the major S&P 500 sectors ended lower on the day, with communication services falling 4.1% and technology down 1.3%. The utilities lost 1.7%.
Investors have been concerned about how aggressive the Fed's actions may be this year following the surprisingly strong US jobs report Friday. They have also been concerned about mixed reports from US companies this earnings season. With results in from more than half of the S&P 500 companies, earnings still are expected to have declined year-over-year in the fourth quarter of 2022.
The sentiment of this paragraph is negative, as US stocks ended down and tech-focused stocks led the way lower. Investors are also concerned about the Federal Reserve's actions this year and mixed reports from US companies this earnings season.
Google Loses $100 Billion After Chatbot Error and Unimpressive Event
Alphabet Inc, the parent company of Google, lost $100 billion in market value on Wednesday after its new chatbot shared inaccurate information in a promotional video and a company event failed to impress. Alphabet shares dropped as much as 9% during regular trading, with volumes nearly three times the 50-day moving average. They pared losses after hours and were roughly flat.
The error was discovered just before the presentation by Google, based in Mountain View, California. Gil Luria, senior software analyst at D.A. Davidson, noted that Google had been scrambling over the last few weeks to catch up on Search and that caused the announcement the day before to be rushed and the embarrassing mess up of posting a wrong answer during their demo.
The chatbot, Bard, was given the prompt: "What new discoveries from the James Webb Space Telescope (JWST) can I tell my 9-year old about?" Bard responded with a number of answers, including one suggesting the JWST was used to take the very first pictures of a planet outside the Earth's solar system, or exoplanets. However, the first pictures of exoplanets were taken by the European Southern Observatory's Very Large Telescope (VLT) in 2004, as confirmed by NASA.
Google is moving quickly to keep pace with OpenAI, a startup Microsoft is backing with around $10 billion, which introduced software in November that has wowed consumers and become a fixation in Silicon Valley circles for its surprisingly accurate and well-written answers to simple prompts. Microsoft held an event touting that it had already released to the public a version of its Bing search with ChatGPT functions integrated.
The appeal of AI-driven search is that it could spit out results in plain language, rather than in a list of links, which could make browsing faster and more efficient. It remains unclear what impact that might have on targeted advertising, the backbone of search engines like Google.
The sentiment of this article is negative, as Alphabet Inc lost a significant amount of money due to an error in their chatbot's advertisement. The article also highlights the competition between Google and Microsoft, as Microsoft has released a version of its Bing search with ChatGPT functions integrated.
Dow Closes Lower as Google Glitch Weighs on Tech and Fed Remarks Sour Sentiment
The Dow Jones Industrial Average closed lower Wednesday, with the Nasdaq down 1.7% and the S&P 500 falling 1.1%. The sentiment on stocks was soured by a slew of hawkish remarks from Federal Reserve officials, as well as a glitch in Google's new artificial intelligence chatbot 'Bard' which reportedly delivered inaccurate answers in an online advertisement just ahead of the event. Google responded by saying it will use external feedback and its own testing to ensure Bard's responses meet a high bar for quality. Federal Reserve Governor Christopher Waller warned of a "long fight" to curb inflation that could require "interest rates higher for longer than some are currently expecting." New York Fed President John Williams also said the Fed “needs to do more” to cool inflation. Big tech stocks such as Apple, Amazon, and Meta Platforms Inc were in the red, but Microsoft was the relative outperformer, closing just below the flatline. Uber Technologies Inc reported a surprise fourth-quarter profit and upbeat guidance, while Chipotle Mexican Grill fell 5% after reporting weaker-than-expected quarterly results. Under Armour reported quarterly results that beat on both the top and bottom lines, but its shares fell 8% as promotional activity is expected to continue to weigh on gross margins. Energy was pressured by a slide in APA Corporation, EQT Corporation, and Chevron Corp, though higher oil prices, underpinned by a stronger dollar, helped keep losses in check.
This summary reflects a negative sentiment, as the Dow Jones Industrial Average, Nasdaq, and S&P 500 all closed lower, and big tech stocks such as Apple, Amazon, and Meta Platforms Inc were in the red. The sentiment was soured further by hawkish remarks from Federal Reserve officials, as well as a glitch in Google's new artificial intelligence chatbot 'Bard'. Additionally, Chipotle Mexican Grill reported weaker-than-expected quarterly results, and Under Armour's shares fell 8% as promotional activity is expected to continue to weigh on gross margins. Energy was also pressured by a slide in APA Corporation, EQT Corporation, and Chevron Corp.
Biden Proposes Quadrupling Stock Buyback Tax, Markets Set to Open Lower
U.S. President Joe Biden proposed quadrupling the 1% tax on stock buybacks in his State of the Union address, with the lack of bold new ideas for his administration being the only notable takeaway. Investors will be keen to see the performance of Disney+ after Bob Iger's return, as the entertainment giant reports earnings after the close. Stocks are set to open lower after posting strong gains in response to Federal Reserve Chair Jerome Powell's interview. Walt Disney (DIS), Uber (UBER), and CVS Health (CVS) will report earnings, while Chipotle (CMG) and Illumina (ILMN) missed expectations with their updates. The West is edging toward sending Ukraine modern fighter jets, and crude oil rises after the first drop in U.S. inventories in six weeks.
The sentiment of the summary is generally negative, as Biden's proposal to quadruple the stock buyback tax is seen as a negative for the markets, and investors are expecting a drop in stocks when they open. Additionally, Chipotle and Illumina missed expectations with their updates, and the West is inching toward sending Ukraine modern fighter jets, which could lead to a wider war.
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