Tag Archives: NVDA

Business

Despite ban, China nuclear-weapons lab has bought U.S. chips for years

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SINGAPORE — China’s top nuclear-weapons research institute has bought sophisticated U.S. computer chips at least a dozen times in the past two and half years, circumventing decades-old American export restrictions meant to curb such sales.

A Wall Street Journal review of procurement documents found that the state-run China Academy of Engineering Physics has managed to obtain the semiconductors made by U.S. companies such as Intel Corp.
INTC,
-6.41%
and Nvidia Corp.
NVDA,
+2.84%
since 2020 despite its placement on a U.S. export blacklist in 1997.

The chips, which are widely used in data centers and personal computers, were acquired from resellers in China. Some were procured as components for computing systems, with many bought by the institute’s laboratory studying computational fluid dynamics, a broad scientific field that includes the modeling of nuclear explosions.

Such purchases defy longstanding restrictions imposed by the U.S. that aim to prevent the use of any U.S. products for atomic-weapons research by foreign powers. The academy, known as CAEP, was one of the first Chinese institutions put on the U.S. blacklist, known as the entity list, because of its nuclear work.

A Journal review of research papers published by CAEP found that at least 34 over the past decade referenced using American semiconductors in the research. They were used in a range of ways, including analyzing data and generating algorithms. Nuclear experts said that in at least seven of them, the research can have applications to maintaining nuclear stockpiles. CAEP didn’t respond to requests for comment.

The findings underline the challenge facing the Biden administration as it seeks to more aggressively counter the use of American technology by China’s military. In October, the U.S. expanded the scope of export regulations to prevent China from obtaining the most advanced American chips and chip-manufacturing tools that power artificial intelligence and supercomputers, which are increasingly important to modern warfare.

An expanded version of this report appears on WSJ.com.

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Business

Dow falls nearly 500 points after strong data, bearish comments by David Tepper

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U.S. stocks traded lower on Thursday, erasing most of their gains from their biggest rally in three weeks after a round of upbeat economic data and a warning from hedge-fund titan David Tepper that he was “leaning short” against both stocks and bonds on expectations the Federal Reserve and other central banks will continue tightening into 2023.

Positive economic news can be a negative for stocks by underlining expectations that monetary policy makers will remain aggressive in their efforts to quash inflation.

What’s happening
  • The Dow Jones Industrial Average
    DJIA,
    -1.51%
    fell 472 points, or 1.4%, to 32,903.
  • The S&P 500
    SPX,
    -1.99%
    shed 71 points, or 1.8%, to 3,807.
  • The Nasdaq Composite
    COMP,
    -2.84%
    fell 272 points, or 2.5%, to 10,437.

A day earlier, all three major indexes recorded their best gain in three weeks as the Dow advanced 526.74 points.

What’s driving markets

Investors saw another raft of strong economic data Thursday morning, including a revised reading on third-quarter gross domestic product which showed the U.S. economy expanded more quickly than previously believed. Growth was revised up to 3.2%, up from 2.9% from the previous revision released last month.

See: Economy grew at 3.2% rate in third quarter thanks to strong consumer spending

The number of Americans who applied for unemployment benefits in the week before Christmas rose slightly to 216,000, but new filings remained low and signaled the labor market is still quite strong. Economists polled by The Wall Street Journal had forecast new claims would total 220,000 in the seven days ending Dec 17.

“Jobless claims ticking slightly up but coming in below expectations could be a sign that the Fed’s wish of a slowing labor market will have to wait until 2023. While weekly jobless claims aren’t the best indicator of the overall labor market, they have remained in a robust range these last two months suggesting the labor market remains strong and has withstood the Fed’s tightening, at least for the time being,” said Mike Loewengart, head of model portfolio construction at Morgan Stanley Global Investment Office, in emailed comments.

“While weekly jobless claims aren’t the best indicator of the overall labor market, they have remained in a robust range these last two months suggesting the labor market remains strong and has withstood the Fed’s tightening, at least for the time being,” he wrote. “It’s no surprise to see the market take a breather today after yesterday’s rally as investors parse through earnings data, and despite some beats this week, expectations that earnings will remain as resilient in 2023 may be overblown.”

Stocks were feeling pressure after Appaloosa Management’s Tepper shared a cautious outlook for markets based on the expectation that central bankers around the world will continue hiking interest rates.

“I would probably say I’m leaning short on the equity markets right now because the upside-downside doesn’t make sense to me when I have so many people, so many central banks, telling me what they are going to do, what they want to do, what they expect to do,” Tepper said in a CNBC interview.

Key Words: Billionaire investor David Tepper would ‘lean short’ on stock market because central banks are saying ‘what they’re going to do’

A day earlier, the Conference Board’s consumer confidence survey came in at an eight-month high, which helped stoke a rally in stocks initially spurred by strong earnings from Nike Inc. and FedEx Corp. released Tuesday evening. This optimistic outlook helped stocks clinch their best daily performance in three weeks.

Volumes are starting to dry up as the year winds down, making markets more susceptible to bigger moves. According to Dow Jones Market Data, Wednesday saw the least combined volume on major exchanges since Nov. 29.

Read: Is the stock market open on Monday after Christmas Day?

In other economic data news, the U.S. leading index fell a sharp 1% in November, suggesting that the U.S. economy is heading toward a downturn.

Many market strategists are positioned defensively as they expect stocks could tumble to fresh lows in the new year.

See: Wall Street’s stock-market forecasts for 2022 were off by the widest margin since 2008: Will next year be any different?

Katie Stockton, a technical strategist at Fairlead Strategies, warned clients in a Thursday note that they should brace for more downside ahead.

“We expect the major indices to remain firm next week, helped by oversold conditions, but would brace for more downside in January given the recent downturn,” Stockton said.

Others said the latest data and comments from Tepper have simply refocused investors on the fact that the Fed, European Central Bank and now the Bank of Japan are preparing to continue tightening monetary policy.

“Yesterday was the short covering rally, but the bottom line is the trend is still short and we’re still fighting the Fed,” said Eric Diton, president and managing director of the Wealth Alliance.

Single-stock movers
  • AMC Entertainment Holdings 
    AMC,
    -14.91%
    was down sharply after the movie theater operator announced a $110 million equity capital raise.
  • Tesla Inc. 
    TSLA,
    -8.18%
    shares continued to tumble as the company has been one of the worst performers on the S&P 500 this year.
  • Shares of Verizon Communications Inc. 
    VZ,
    -0.53%
    were down again on Thursday as the company heads for its worst year on record.
  • Shares of CarMax Inc. 
    KMX,
    -6.60%
    tumbled after the used vehicle seller reported fiscal third-quarter profit and sales that dropped well below expectations.
  • Chipmakers and suppliers of equipment and materials, including Nvidia Corp.
    NVDA,
    -8.60%,
    Advanced Micro Devices 
    AMD,
    -7.17%
    and Applied Materials Inc.
    AMAT,
    -8.54%,
    were lower on Thursday.

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Business

Opinion: This record number in Nvidia earnings is a scary sight

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Nvidia Corp.’s financial results had a bit of a surprise for investors, and not on the good side — product inventories doubled to a record high as the chip company gears up for a questionable holiday season.

Nvidia reported fiscal third-quarter revenue that was slightly better than analysts’ reduced expectations Wednesday, but the numbers weren’t that great. Revenue fell 17% to $5.9 billion, while earnings were cut in half thanks to a $702 million inventory charge, largely relating to slower data-center demand in China.

Gaming revenue in the quarter fell 51% to $1.57 billion. Nvidia said it is working with its retail partners to help move the currently high-channel inventories.

While the company was writing off the inventory for China, its own new product inventory was growing. Nvidia
NVDA,
-4.54%
reported that its overall product inventory nearly doubled to $4.45 billion in the fiscal third quarter, compared with $2.23 billion a year ago and $3.89 billion in the prior quarter. Executives cited its coming product launches, designed around its new Ada and Hopper architectures, when asked about the inventory gains.

In the semiconductor industry, high inventories can make investors nervous, especially after the industry had so many supply constraints in recent years that quickly swung to a glut of chips in 2022. With doubts about demand for gaming cards and consumers’ willingness to spend amid sky-high inflation this holiday season, having all that product on hand just amps up the nerves.

Full earnings coverage: Nvidia profit chopped in half, but tweaked servers to China offset earlier $400 million warning

Chief Financial Officer Colette Kress told MarketWatch in a telephone interview Wednesday that the company’s high level of inventories were commensurate with its high levels of revenue.

“I do believe….it is our highest level of inventory,” she said. “They go hand in hand.” Kress said she was confident in the success of Nvidia’s upcoming product launches.

Nvidia’s revenue reached a peak in the April 2022 quarter with $8.3 billion, and in the past two quarters revenue has slowed, with gaming demand sluggish amid a transition to a new cycle, and a decline in China data-center demand due to COVID-19 lockdowns and U.S. government restrictions.

For its data-center customers, the new architectures promise major advances in computing power and artificial-intelligence features, with Nvidia planning to ship the equivalent of a supercomputer in a box with its new products over the next year. Those types of advanced products weigh on inventory totals even more, Kress said, because of the price of the total package.

“It’s about the complexity of the system we are building, that is what drives the inventory, the pieces of that together,” Kress said.

Bernstein Research analyst Stacy Rasgon believes that products based on Hopper will begin shipping over the next several quarters, “at materially higher price points.” He said in a recent note that he believes Nvidia’s numbers were likely hitting a bottom in this quarter.

“We remain positive on the Hopper ramp into next year, and believe numbers have at this point likely reached close to bottom, with new cycles brewing and an attractive secular story even without China potential,” Rasgon said in an earnings preview note Tuesday.

Read also: Warren Buffett’s chip-stock purchase is a classic example of why you want to be ‘greedy only when others are fearful’

Nvidia Chief Executive Jensen Huang reminded investors on a conference call that the company’s inventories are “never zero,” and said everyone is enthusiastic about the upcoming launches. But it doesn’t take too long of a memory to conjure up a time when Nvidia went into a holiday with an inventory backlog that included new architecture and greatly disappointed investors: Four years ago, Huang had to cut his forecast for holiday earnings twice amid a “crypto hangover” with similar dynamics to the current moment

Investors need faith that this holiday season will not be the same, even as demand for some videogame products declines after a pandemic boom just as the market for cryptocurrency — some of which has been mined with Nvidia products — hits a rough patch. Huang said that Nvidia’s RTX 4080 and 4090 graphics cards based on the Ada Lovelace architecture had an “exceptional launch,” and sold out.

Nvidia shares gained more than 2% in after-hours trading Wednesday, suggesting that some are betting that this time will be different. That enthusiasm needs to translate into revenue for Nvidia so that this big gain in inventories does not end up being part of another write-down at some point in the future.

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Business

Stock Market Jumps After S&P 500’s Worst Week in Two Years

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U.S. stocks rallied Tuesday off their worst week since March 2020, offering investors a reprieve from a recent stretch of whipsaw trading that had sent stocks and cryptocurrencies falling.

The S&P 500 gained 89.95 points, or 2.4%, to 3764.79. The Dow Jones Industrial Average added 641.47, or 2.1%, to 30530.25. The Nasdaq Composite Index jumped 270.95 points, or 2.5%, to 11069.30. The U.S. stock market was closed Monday for the Juneteenth federal holiday. 

Bitcoin rose alongside other cryptocurrencies, continuing to claw back some losses after a bruising weekend. Bitcoin rose to $20,836.15, up 1.9% from its 5 p.m. ET value Monday, and about 18% higher from a recent low of $17,601.58 reached Saturday, according to CoinDesk data.

Investors’ appetite for riskier assets on Tuesday follows a tumultuous week in the markets, sparked by the Federal Reserve’s approval of a 0.75-percentage-point interest-rate increase, the largest since 1994. Investors scrambled to unload riskier assets amid growing fears that central bankers will plunge the U.S. economy into a recession. The benchmark S&P 500 finished the week 5.8% lower, its largest one-week decline in more than two years.

Meanwhile, investors await further commentary from Federal Reserve Chairman

Jerome Powell

when he testifies before Congress on both Wednesday and Thursday.

“Investors will be looking for any inkling as to whether Chair Powell’s commitment to another 0.75 percentage point rate hike is serious,” said

Michael Farr,

president of Farr, Miller & Washington.

Both investors and policy makers are eager to see the June print for consumer inflation expectations, due Friday. At his news conference last week, Mr. Powell said the preliminary reading of 5.4% was “eye catching.”

“Markets are going to watch the final read for consumer inflation expectations in the University of Michigan survey. They want to see how aggressive the Fed will have to be,” said

Rob Haworth,

senior investment strategist at U.S. Bank Wealth Management. “If expectations stop accelerating, markets may read that as Fed policy starting to work.”

Investors and analysts say they expect more pain ahead in the markets, though some are still willing to wade in and buy stocks at a discount after a selloff that has dragged the S&P 500 down 21% this year. Many pointed to Tuesday’s recovery as a bounce off last week’s drawdown.

“This still feels like a bit of a dead-cat bounce,” said

Viraj Patel,

global macro strategist at Vanda Research, referring to a term used to describe a brief market rally. He said investors’ willingness last week to dump shares of winning sectors this year, including energy and utilities stocks, might be a signal that this year’s drawdown has entered its latter stages. Still, he said, he believes the selloff “still has legs to go.”

Tuesday’s bullish mood came alongside a selloff in U.S. government bonds, sending the yield on the 10-year U.S. Treasury note higher. The yield on the benchmark note traded at 3.304%, up from 3.238% Friday. Yields and bond prices move in opposite directions.

Government leaders and officials in recent days have tried to assuage an increasingly jittery nation that an economic slowdown isn’t guaranteed. President

Biden

on Monday said he spoke with

Lawrence Summers,

a former Treasury secretary, and reiterated that he doesn’t see a recession as inevitable. Federal Reserve Bank of St. Louis President

James Bullard

also said the economy appears on track for more expansion this year.

Still, many market watchers are bracing for an economic downturn. In a note Monday, a team of

Goldman Sachs

economists increased their outlook for a U.S. recession, citing concerns that the Fed will feel compelled to respond forcefully to inflation data, even if economic activity slows. The team now sees a 30% probability of entering a recession over the next year, versus 15% previously, and a 25% probability of entering a recession in the second year if one is avoided in the first. 

Safe-haven assets retreated Tuesday amid improved investor sentiment.



Photo:

Spencer Platt/Getty Images

U.S. stock market gains were broad-based, with all 11 of the S&P 500’s sectors rising on Tuesday.

Energy stocks led their peers.

Diamondback Energy

rose $9.99, or 8.2%, to $132.28.

Exxon Mobil

climbed $5.36, or 6.2%, to $91.48.

Brent crude, the international benchmark, rose for a second day, climbing 0.5% to $114.65 a barrel. Last week, oil prices fell amid concerns that a possible recession would weigh on energy demand.

Growth stocks, which have been beaten down this year, notched gains. Data and software company Palantir Technologies and chip maker Nvidia both gained more than 4%.

Seema Shah,

chief strategist at Principal Global Investors, said that for now, investors may see value in companies whose shares have been badly beaten down this year. However, she said, she expects the market to fall further once investors begin to see consistent declines in earnings growth.

“I think what you could see is a [modest] rally through the summer…and as you get into the autumn months and the next earnings season, I think a lot of the economic data is going to start to turn and earnings growth is going to start to turn,” she said. Still, she noted, even now, “sentiment is deteriorating very rapidly.”

Overseas, the pan-continental Stoxx Europe 600 rose 0.4%. In Asia, trading was mixed. Hong Kong’s Hang Seng rose 1.9% and Japan’s Nikkei 225 gained 1.8%, while China’s Shanghai Composite lost 0.3%.

Write to Caitlin McCabe at caitlin.mccabe@wsj.com and Eric Wallerstein eric.wallerstein@wsj.com 

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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Business

SoftBank Pitches IPO for Arm After Deal With Nvidia Falls Through

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TOKYO—After a deal that could have been worth $80 billion to his company fell apart,

SoftBank Group Corp.

9984 5.85%

Chief Executive

Masayoshi Son

is playing salesman for Plan B—an initial public offering of chip designer Arm.

Mr. Son sounded as if he were on a roadshow for investors at a news conference in Tokyo on Tuesday. He said Arm is entering a “golden period” of high demand for the chips it helps create in smartphones, electric vehicles and computer-server farms operated by the likes of

Amazon.com Inc.

The pitch came hours after the Japanese investment and technology conglomerate said it was abandoning plans to sell Arm to Nvidia Corp.—in what would have been the largest semiconductor deal on record—because antitrust concerns stood in the way.

Mr. Son said he was surprised to see the backlash not only from U.S. regulators who sued to block the deal in December but also big tech companies that rely on Arm’s chip designs.

“We saw strong opposition because Arm is one of the most important and essential companies that most companies in the IT industry or in Silicon Valley rely on, either directly or indirectly,” he said.

SoftBank paid $32 billion when it acquired the U.K.-based chip business in 2016. Mr. Son said the sale to Nvidia, under which SoftBank would have received both cash and Nvidia shares, could have been worth $80 billion because of a rise in Nvidia’s share price.

SoftBank now plans to pursue a public listing of Arm by March 2023. Arm shares will most likely be listed on the tech-heavy

Nasdaq Stock Market

in the U.S. because many of Arm’s clients are based in Silicon Valley, Mr. Son said.

He said SoftBank didn’t intend to keep Arm for itself because he wanted outside investors in the SoftBank-led Vision Fund, which owns a quarter of Arm, to be able to cash in through an IPO and because he wanted to give stock options as incentives to Arm employees.

Uncertainties linger around an Arm IPO, including whether the volatile semiconductor business will stay hot through this year.

Chinese tech stocks popular among U.S. investors have tumbled amid the country’s regulatory crackdown on technology firms. WSJ explains some of the new risks investors face when buying shares of companies like Didi or Tencent. Photo Composite: Michelle Inez Simon

Tech shares have fallen recently because of tightening by the Federal Reserve. Fumio Matsumoto, chief strategist at

Okasan Securities,

said that made the timing for a big IPO less than ideal, and he also observed that a strategic buyer in the chip industry might pay more for Arm because of the potential synergy effects.

Still, Mr. Matsumoto said the downturn in Silicon Valley also offered opportunities for Mr. Son, and it made sense to raise cash for his war chest from an Arm IPO. “Because technology share prices have gone through a sharp correction over the past year, we are seeing a good cycle to consider preparing” for new investments, Mr. Matsumoto said.

After a rough patch a few years ago, Arm is on track for $2.5 billion in revenue this fiscal year, which ends in March, up from $1.98 billion the previous year, SoftBank said. Arm’s operating profit, according to one type of calculation used by SoftBank, more than doubled over the past two years to a projected $900 million this fiscal year.

An array of consumer electronics companies as well as semiconductor companies, including

Apple Inc.,

Samsung Electronics Co.

and

Qualcomm Inc.,

use Arm’s designs in at least some of their chips. The designs are known for their low power consumption, making them nearly ubiquitous in mobile devices.

The collapse of the Arm deal is just one of the challenges Mr. Son is tackling in his globe-spanning investment portfolio. He said “we are in pain” over China’s crackdown on its big tech companies, which hit SoftBank investments including its most valuable one, e-commerce giant Alibaba Group Holding Ltd.

The past two years have seen some of the wildest swings in the four decades since Mr. Son started SoftBank. The pandemic, initially seen as a blow, soon emerged as a boon for many technology businesses including those in which SoftBank has invested. SoftBank shares surged, only to fall by half from their recent peak when the China troubles hit and the Arm deal ran aground.

SoftBank’s net asset value, Mr. Son’s preferred measure of the company’s finances, fell by ¥1.6 trillion, equivalent to about $14 billion, in the October-December quarter to ¥19.3 trillion. That is a fall of 30% from the peak in September 2020 and the lowest level since 2017.

Mr. Son blamed the sharp fall in Alibaba shares. The Chinese company, which once made up the majority of SoftBank’s net assets, now accounts for less than a quarter of the total.

SoftBank said it unloaded a small number of Alibaba shares to settle contracts with its lenders, but Mr. Son said SoftBank’s stake in the Chinese company remained close to a quarter.

Mr. Son, who turns 65 this year, has lost a number of top lieutenants in recent years, including Chief Operating Officer

Marcelo Claure,

who stepped down in January after a pay dispute. Mr. Son said that while he was grooming successors, he didn’t intend to step down soon.

“If I stop, I’d become an old grandpa very quickly,” he said. He boasted that when he went bowling recently, he topped 200 points in two different rounds—a fine score for an amateur. “I thought, ‘Hey, I’m still pretty young,’ ” he said.

—Sam Schechner in Paris contributed to this article.

Write to Megumi Fujikawa at megumi.fujikawa@wsj.com and Peter Landers at peter.landers@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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Business

Stocks Close Higher on Final Day of Tumultuous Month

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The S&P 500 rose Monday but closed out its worst month since March 2020 as expectations for higher interest rates erode enthusiasm for stocks.

The broad U.S. stock index retreated 5.3% in volatile trading in January as investors wrestle with the question of how tighter monetary policy will influence equity valuations. High inflation and a strong labor market have led Federal Reserve officials to accelerate their plans for unwinding support for the economy.

The central bank last week signaled that it would begin steadily raising rates in mid-March. Adding to investors’ anxieties in recent weeks: the possibility of a Russian invasion of Ukraine and the surge of the Omicron variant of Covid-19.

The suite of concerns has led to declines across the stock market, with 10 of the S&P 500’s 11 sectors retreating in the new year. Only energy stocks have bucked the downward trend.

“January really snuck up on a lot of people,” said

Wayne Wicker,

chief investment officer at MissionSquare Retirement. “Everybody was predicting volatility, but I think the declines in January probably exceeded expectations.”

The shift by the Federal Reserve unsettles a key support for stocks. Investors credit the central bank’s near-zero short-term interest rates and program of bond-buying with helping fuel the stock market’s run from its lows of March 2020. Even after pulling back in recent weeks, the S&P 500 is trading at about double that month’s closing low.

On the final trading day of January, the S&P 500 advanced 83.70 points, or 1.9% to 4515.55. The Dow Jones Industrial Average gained 406.39 points, or 1.2%, to 35131.86. The tech-heavy Nasdaq Composite advanced 469.31 points, or 3.4%, to 14239.88, chipping away at its monthly losses. The day’s gains built on a rally Friday for all three indexes.

Technology stocks have slumped this month as investors consider how rising interest rates could weigh on the group’s pricey valuations, which are based in part on expectations for growth far into the future.

Microsoft

shares dropped 7.5% in January, while

Nvidia’s

slumped 17%.

The Nasdaq Composite fell 9% in January, its largest one-month decline since March 2020. The Dow Jones Industrial Average fared better, losing 3.3% for the month.

“Tech was just very highly valued, very overbought,” said

Dustin Thackeray,

chief investment officer at Crewe Advisors. “It was certainly due for a pullback.”

Amateur investors took the stock market by storm a year ago, buying up shares of meme stocks like GameStop and AMC Entertainment. Many remember it as a revolution against Wall Street, but in the end, they largely just lined the pockets of major financial firms. WSJ’s Dion Rabouin explains. Illustration: Sebastian Vega

Trading in January has featured big days both up and down, as well as sharp intraday reversals.

“There has been extreme volatility so far this year,” said

Louise Dudley,

an equities portfolio manager at Federated Hermes. “People are particularly worried with the interest-rate expectations continuing to get higher. We’re definitely seeing from the U.S. that they’re very on top of the inflation numbers—they’re going to do everything they can.”

Ms. Dudley said she expects that volatility will lessen as investors get more clarity over whether inflation has peaked and how companies expect to be impacted by higher prices for energy, labor and materials.

Investors are listening for clues about companies’ expectations as corporate earnings season continues. Analysts expect that profits from companies in the S&P 500 rose 24% in the fourth quarter from a year earlier, according to FactSet. About one-third of companies in the index have reported.

Strong earnings reports, coupled with the depth of the stock-price declines in January, make some investors think the market may rise from here.

“I think there’s a good chance that last week marked a short-term bottom,” said

Andrew Slimmon,

senior portfolio manager at Morgan Stanley Investment Management. “The fundamentals have not validated the weakness”

Among individual stocks, shares of

Netflix

jumped $42.78, or 11%, to $427.14 on Monday after a ratings upgrade from

Citigroup

and share purchases by Co-Chief Executive

Reed Hastings.

Still, the stock ended January down 29%, its worst month since April 2012.

U.S.-listed shares of

Sony

rose $4.82, or 4.5%, to $111.66 after Sony Interactive Entertainment LLC said it is buying videogame developer Bungie. Earlier in January Microsoft said it would buy videogame giant

Activision Blizzard.

Citrix Systems

shares fell $3.61, or 3.4%, to $101.94 as the cloud-computing company said it would be taken private in an all-cash acquisition valued at $16.5 billion.

Shares of

L3Harris Technologies

dropped $9.38, or 4.3%, to $209.29 after the aerospace and defense company gave a downbeat revenue outlook. 

Some investors are worried that the reversal of easy-money policies will weigh on tech stocks.



Photo:

Allie Joseph/Associated Press

In bond markets, the yield on the benchmark 10-year U.S. Treasury note was little changed, edging up to 1.780% Monday from 1.779% Friday. The monthly yield gain was the largest since March 2021. Yields rise as bond prices fall.

Global oil benchmark Brent crude gained 17% for the month to $91.21 per barrel, its highest settle value since October 2014. Some analysts predict the price of oil will head even higher.

The price of gold slipped in January, losing 1.8% to $1795.00 per troy ounce. Bitcoin fell 17% in January to $38,443.54 at 5 p.m. ET Monday.

Overseas, the pan-continental Stoxx Europe 600 gained 0.7% for the day. In Asia, markets were closed in China and South Korea for a holiday. Hong Kong’s Hang Seng and Japan’s Nikkei 225 each added more than 1%. 

Macau Legend Development

shares fell 19% in Hong Kong after media reports of the arrest of its chief executive over the weekend, on suspicion of money laundering and illegal gambling, including operating online casinos.

Write to Karen Langley at karen.langley@wsj.com and Caitlin Ostroff at caitlin.ostroff@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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Business

Stock Market Today: Dow Rose as Moderna Slumped Again

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The


Dow Jones Industrial Average
had one of its best days this year on Monday, as value and defensive stocks led a rebound from last week’s market declines.

The news Monday was relatively positive, with signs that the Omicron variant of Covid-19 might be less severe than earlier strains and reports that China is considering easing monetary policy. On the Federal Reserve policy front, the latest reporting suggested that the central bank could announce plans at its next meeting to more quickly pull back from its bond-buying program.

The Dow surged 647 points, or 1.9%, for its best one-day point gain since November 2020 and the largest percentage increase since last March. The


S&P 500
closed up 1.2% and the Nasdaq Composite rose 0.9%, while the small-cap


Russell 2000
gained 2.1%, for its fourth-straight daily move of 2% or more.

Post-pandemic reopening stocks were among the biggest gainers on Monday. The


U.S. Global Jets
exchange-traded fund (ticker: JETS) added 5.3%, as


American Airlines Group

(AAL) added 7.9% and


United Airlines Holdings

(UAL) jumped 8.3%. Cruise lines


Carnival

(CCL) and


Royal Caribbean Cruises

(RCL) surged 8.0% and 8.3%, respectively.


Marriott International

(MAR) added 4.5%,


Live Nation Entertainment

(LYV) rose 6.1%, and


Cinemark Holdings

(CNK) gained 7.7%.

S&P 500 value stocks as a group gained 1.4% on Monday, versus a 0.9% rise for growth stocks in the index.

Investor attention remains focused on the newly discovered Omicron variant of coronavirus, news of which recently brought about the Dow’s worst day of the year and saw volatility rock markets last week. The latest headline driving sentiment comes from South Africa, where data—though from a small sample size—suggest that symptoms caused by Omicron were milder than with other variants.

Investors aren’t out of the woods yet, however. The broad market will remain sensitive to daily headlines about Omicron—both good and bad.

“It still feels like we’re in the guesswork stage of working out what the impact of Omicron will be,” said Russ Mould, an analyst at broker AJ Bell. “It would be naive to rule out further volatility as markets attempt to work out exactly what’s going on.”

On Monday, the news was positive and investors bought the market. All 11 S&P 500 sectors closed in the green.

Fed policy has been pushing investor sentiment the other way. Chair Jerome Powell indicated last week that the central bank would consider speeding up its slowing, or tapering, of monthly asset purchases, which add liquidity to markets, amid higher inflation.

“We’re really at a fascinating crossroads in markets at the moment,” said Jim Reid, a strategist at Deutsche Bank. “The market sentiment on the virus and the policy makers at the Fed are moving in opposite directions.”

Those trends mean different things for different kinds of stocks and indexes.

If Omicron is less severe than feared, then the economy might hold up better than expected. That would be good for economically-sensitive cyclical stocks, like many of those in the Dow. Higher bond yields and interest rates, however, can put downward pressure on stock valuations, particularly those with nosebleed price-to-earnings ratios, many of which are found in the Nasdaq.

“Like Friday, how the Nasdaq trades will likely determine the day, as markets want to see the tech sector stabilize after intense weakness late last week,” wrote the Sevens Report’s Tom Essaye. “If the Nasdaq can stabilize, the broad market can bounce.”

The tech-heavy index bounced from a loss of about 1% shortly after Monday’s opening bell.

In the commodity space, oil prices rose Monday after Saudi Arabia raised its January prices for Asian and U.S. customers over the weekend by $0.60, in a sign of firmer demand expectations.

Futures contracts for the international oil benchmark Brent rose 4.6%, to above $73 a barrel, with U.S. futures for West Texas Intermediate crude up 4.9% to about $69.50 a barrel.

“Given that OPEC+ is proceeding with its planned 400,000 barrels per day increase this month, it appears that Saudi Arabia is taking a punt that Omicron is a virus in a teacup,” said Jeffrey Halley, an analyst at broker Oanda. “Saudi Arabia’s confidence, along with the South African Omicron article over the weekend, is a boost to markets looking for good news in any corner they can find it.”

Cryptocurrency markets remained depressed after digital assets took a tumble over the weekend.


Bitcoin
and


Ether,
the two leading cryptos, remained off their lows following the stark fall Saturday, but were slipping after steadying Sunday. Bitcoin was trading hands around $49,000—down from more than $57,000 as recently as Friday—with Ether holding above $4,000.

Here are several stocks on the move Monday:


Nvidia

(ticker: NVDA) was among the most actively traded stocks in the U.S. Monday, closing down about 2.1%. Shares of fellow semiconductor firm Advanced Micro Devices (AMD) lost 3.4%.


Lucid Group

(LCID) stock dropped 5.1% after the electric-vehicle startup revealed that it had received a subpoena from the Securities and Exchange Commission, without offering many details.


Kohl’s

(KSS) gained 5.4% after an activist investor said it should explore selling itself.


Moderna

(MRNA) fell 13.5% after its president said that the risk that vaccines don’t work as well against Omicron is high. Pfizer (PFE) stock slid more than 5%.

Alibaba Group Holding (BABA) stock closed up 10.4% after a management shakeup at the e-commerce giant.


Deutsche Bank

(DB) rose 3.6% after JPMorgan upgraded the bank to Overweight from Neutral, adding that the group shows positive revenue developments in key divisions.

Pharma giant


Roche

(ROG.Switzerland) rose 1.5% in Zurich after announcing that it would release rapid antigen tests for Covid-19 and flu viruses next month.

Food delivery group


Just Eat Takeaway.com

(JET.U.K.) fell 4.9% in London following a price target cut and downgrade to Market Perform from Outperform by Bernstein, which sees few positive catalysts in the pipeline for the company.

Write to Jack Denton at jack.denton@dowjones.com

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Business

Stock Market Today: Dow and Oil Drop as Covid Fears Grip Europe While Tech Rises

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Current Chair Jerome Powell is viewed as likely to be renominated as leader of the Federal Reserve.


Justin Sullivan/Getty Images

Technology stocks popped on Friday, while the


Dow Jones Industrial Average
fell and bond yields dipped alongside a new surge in Covid-19 cases. 

In midday trading, the Dow slid 174 points, or 0.5%, after the index slipped 60 points Thursday to close at 35,870. The


S&P 500
was rising 0.2% after the index closed at an all-time high Thursday. The technology-heavy


Nasdaq Composite
rose 0.7%.

The 10-year Treasury yield fell to 1.53% from a Thursday close of 1.61%. That’s a steep drop for one day, bringing it farther below its second half 2021 peak of 1.7%, hit in late October. 

That bodes well for the tech trade. Lower bond yields make futures profits more valuable—and fast-growing companies in the sector are expecting a large share of their profits to come many years down the line. 

Consistent with that, the S&P 500 is outperforming the Dow because of its concentration in technology. Outside of tech, stocks were having a rough day; almost 60% of S&P 500 stocks were in the red, according to FactSet.

Ultimately, market participants are rushing into safety Friday. The drop in the yield means investors are buying up the bond, sending the price higher. This comes as new Covid-19 cases perk up in Europe, prompting Austria to announce lockdowns beginning next week. 

Also not helping investors’ appetite for risk was economic data out of Germany. The countries’ producer-price index gained 3.8% month-over-month, higher than the expected 1.9% and above the previous result of 2.3%. Such strong inflation could compel the European Central Bank to hike interest rates, which could choke off economic growth, ultimately lowering inflation. ECB President Christine Lagarde said Monday morning that the central bank is currently unlikely to raise rates in 2022. Still, economic data will help guide monetary policy.  

The price of oil also dropped. WTI crude oil fell 4.2% to $75.70 a barrel. It’s down 9% from its 2021 high of more than $84 a barrel hit on Nov. 9. 

Oil stocks slid, too. The 


Energy Select Sector SPDR
Fund (XLE) fell more than 3%. It’s down just over 7% since the end of October when it hit a 2021 high. 

Overseas, Hong Kong’s


Hang Seng
Index fell 1.1%, underperforming other bourses in Asia as it was weighed down by a stark fall in


Alibaba

(ticker: BABA and 9988.H.K.) stock following the Chinese e-commerce giant’s quarterly results Thursday that showed slowing growth. The pan-European


Stoxx 600
fell 0.3%.

Here are five stocks on the move Friday:


Intuit

(INTU) stock gained 9.5% after the company reported a profit of $1.53 a share, beating estimates of 97 cents a a share, on sales of $2 billion, above expectations for $1.8 billion. 


Williams-Sonoma

(WSM) stock rose 0.6% after the company reported a profit of $3.32 a share, beating estimates of $2.56 a share, on sales of $2.1 billion, above expectations for $1.8 billion. 


Foot Locker

(FL) stock dropped 12% even after the company reported a profit of $1.93 a share, beating estimates for $1.37 a share, on sales of $2.19 billion, above expectations for $2.15 billion. 


Nvidia

(NVDA), which has been on a tear this week—up around 7% over the last five days—was rising again, climbing 4%.


Workday

(WDAY) was sliding, down 3.1% despite posting better-than-expected earnings late Thursday.

Write to Jacob Sonenshine at jacob.sonenshine@barrons.com

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Business

Peloton, Nvidia, Airbnb, Expedia: What to Watch in the Stock Market Today

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Futures ticked higher after jobs figures showed that hiring picked up in October and the unemployment rate fell. Here’s what we’re watching ahead of Friday’s opening bell:

  • Peloton Interactive shares went off the wheels, plunging 34% premarket. The maker of connected fitness equipment reported its smallest quarterly gain in subscriber growth since it became a public company two years ago, and said that fewer people are joining its online workouts.
  • Airbnb gained 5% ahead of the bell. The home-sharing company posted record revenue in the third quarter, punctuating its rebound from the collapse in bookings during the early days of the pandemic.
  • Nvidia added 2.1% premarket. Wells Fargo on Thursday lifted its price target for the stock, and it notched its best one-day performance in 19 months.
  • Pfizer shares climbed 12% after the drugmaker said a preliminary look at study results indicated that its experimental pill was highly effective at preventing people at high risk of severe Covid-19 from needing hospitalization or dying.
  • Expedia jumped 14% after the online travel agency turned a profit for the third quarter, driven by the performance of its Vrbo business, domestic travel and improvements across its lines of business.
  • Square dropped 3.9%. The payments firm reported weaker-than-expected revenue as it brought in far lower revenue from cryptocurrency bitcoin than what analysts were expecting.
  • GoPro rose 11%. The camera maker easily exceeded expectations for its most recent quarter and expressed confidence in its ability to hit its full-year targets.
  • DraftKings shares fell 6.1% after the online-betting company posted third-quarter revenue growth that fell short of analysts’ expectations and turned in a steeper net loss than had been anticipated.
  • Goodyear Tire & Rubber  and  Dominion Energy  are due to report earnings before the opening bell.
  • Yelp climbed 5.9% off hours. The online-reviews site reported record-tying quarterly revenue and earnings that blew past Street estimates.
  • American Homes 4 Rent slipped 0.9% off hours. The home-rental company reported better-than-expected results in the latest quarter as the demand for single-family home rentals remained strong.
  • Boeing added 2.4%. Current and former directors have reached an approximately $225 million agreement to settle a shareholder lawsuit that claimed the plane maker’s board failed to properly oversee safety matters related to the 737 MAX.
Chart of the Day
  • Investors have jolted government bond markets in the past month as they reassess what will happen to the basic cost of money that underpins the financial system. But other markets don’t seem to care.

Write to James Willhite at james.willhite@wsj.com

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Business

Palantir, Shiba Inu, Apple, American Airlines: What to Watch in the Stock Market Today

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Palantir stock jumped on a U.S. Army contract; Airlines are slipping as fuel costs surge

Stocks dropped after the opening bell, with technology shares leading losses as bond yields extended rises. Here’s what we’re watching as Wednesday’s trading heats up.

Chart of the Day

Write to James Willhite at james.willhite@wsj.com

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Stocks dropped after the opening bell, with technology shares leading losses as bond yields extended rises. Here’s what we’re watching as Wednesday’s trading heats up.

  • Palantir Technologies
    jumped 7% in early trading. The data-software company said it was selected for a U.S. Army intelligence program contract.
  • Facebook
    shares ticked 1.1% lower after the company spent a day in the headlines amid a whistleblower’s testimony on Capitol Hill and a widespread outage of its services.
  • But the downdraft in major tech shares was hitting most of the giants.
    Microsoft
    slipped 0.8% ,
    Apple
    shed 1.4%, Google-parent
    Alphabet
    fell 0.8% and
    Netflix
    gave up 0.4%.
  • Cryptocurrencies turbo-charged by Tesla CEO

    Elon Musk
    got another boost Wednesday. The token Shiba Inu gained 48% over the previous 24 hours, adding to a days-long rally after Mr. Musk posted a new photo of his Shiba Inu puppy named Floki on Monday. The coin now has a market value of $9 billion, making it the twentieth largest cryptocurrency, according to CoinMarketCap.com. Dogecoin, a favorite of Mr. Musk’s, also rose 3% over the previous 24 hours.

  • Shares of
    American Airlines Group
    lost 2.5% and
    Delta Air Lines
    shed 1.7%, weighed down by concerns about fuel costs and a slowing economic growth.
  • Acuity Brands
    soared 13% after the industrial-technology company said its profit for the fiscal fourth quarter rose as sales benefited from improved service levels and an improving economy.
  • Vaccine makers
    Moderna
    and
    Novavax
    look set to remain stuck in the doldrums that began after Merck’s successful test of its Covid-19 treatment. Novavax dropped 3.1% and Moderna fell 4%.
    Pfizer
    was also down, by 0.8%.
  • Business-development company
    Saratoga Investment
    ‘s stock nudged up 1.8% after it reported record repayments during the second quarter.
  • Levi Strauss
    will give an earnings update after the close.
Chart of the Day
  • Silver prices just wrapped up their worst four-month stretch since November 2014, dragged down by expectations for higher interest rates and a slowdown in manufacturing activity.

Write to James Willhite at james.willhite@wsj.com

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