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Good Thursday. CNBC's Halftime Report and Closing Bell will be live broadcasted from San Francisco today, creating a special “AI in America” program. You can watch the live broadcast on CNBC or CNBC.
Nasdaq futures fell this morning. The market just went through a tough day; let's take a look back below.
Here are five things investors need to know before the start of trading days:
1. The return on investment of AI
After a calm start to the week, investors sold stocks yesterday due to concerns about excessive spending on artificial intelligence. Both the S&P 500 index and the Nasdaq Composite index fell by more than 1%, recording their worst performances in over two months.
What needs to be understood is:
- CoreWeave's stock price led the decline, falling by more than 15%, marking the largest single-day drop since February. Investors are concerned that tech companies have borrowed too much to build AI infrastructure. The yield on the company's bonds has also risen significantly.
- According to reports from Oliver Renick of CNBC, the trading volume of options in CoreWeave soared yesterday, with traders purchasing large quantities of what is known as “bubble puts”.
- Dell experiences its largest single-day decline in over a year, leading to a drop in a number of data center equipment stocks.
- Apart from tech stocks, the stock price of Bank of America fell by nearly 5% after its earnings failed to meet Wall Street's expectations.
- However, not all the news is bad: Berkshire Hathaway invested $330 million in Bending Spoons, driving the stock price of this continuous acquirer up by 41%. Berkshire's Class A shares recorded their first consecutive 10-day increase since 2018.
- Chip stocks continued to decline before the opening session this morning, with NVIDIA falling 1.6%, AMD falling more than 3%, and Micron dropping 4.5%.
2. High temperature trend
The consumer price index ( CPI ) announced yesterday was higher than economists' expectations when measured over a 12-month period, mainly due to the soaring energy prices.
According to the analysis of CNBC, this report indicates that the annual inflation rate in CPI has exceeded the widely accepted 2% target for the 66th consecutive time, which is the longest duration since the beginning of this century. Last week, the Chairman of the Cleveland Federal Reserve, Beth Hammack, warned that consumers may begin to regard high inflation as a "new normal," which could have a negative impact on the effectiveness of monetary policy tools.
The Producer Price Index for September ( PPI , which measures inflation at the wholesale level), as well as retail sales data, are scheduled to be released this morning.
3. Tanker Challenge
Speaking of energy prices: As the mid-term elections approach, diesel prices remain high. According to a report by Gabriel Cort, analysts do not expect costs to fall soon, even though President Trump recently reached a diesel agreement with Russia.
Ukrainian President Zelenskyy also told The Financial Times that Kiev will resume attacks on Russian refineries, stating that Moscow did not comply with the "energy ceasefire" announced by Trump on Sunday. This proposed ceasefire also seems to be aimed at lowering diesel and crude oil prices.
Meanwhile, a container ship sank in the Strait of Hormuz yesterday, and Iran has intensified attacks on merchant vessels in an attempt to prevent the export of crude oil through this route.
4. Wednesday
Netflix stated in a memorandum obtained by CNBC that it will lay off approximately 6%, which is about 1,000 employees. The layoffs will mainly affect the company's product, technology, legal, and human resources teams.
Just a few weeks have passed since Netflix, co-CEO Ted Sarandos, stated that "the company's growth is not as fast as I hoped." Sarandos and another co-CEO, Greg Peters, wrote in a memo to employees yesterday: "Our business is strong and continues to grow; we are still on track to meet our annual expectations."
Remember to mark the calendar: Netflix will release its financial report on Tuesday.
5. Good debt?
Mortgage loans and student loans are often referred to as "good debt." In a new set of articles published this morning, CNBC journalists explored what this term actually means and what considerations should be taken before undertaking "good debt."
Experts warn that such optimistic labels can sometimes conceal risks that borrowers may not be able to afford. This issue is particularly important for college students and their parents, as perceptions of the benefits of higher education are changing.
The Daily Dividend
Merck CEO Rob Davis stated yesterday to CNBC's Annika Kim Constantino that he expects the production of the breakthrough cancer vaccine developed in collaboration with Moderna to accelerate over time. Here are his exact words:
CNBC's Michelle Fox, Oliver Renick, Isabel O, Brien, Kai N token issuance, l-Schwarz, Hugh Son, CJ Haddad, Paulina Likos, Lee Ying Shan, Sawdah Bhaimiya, Jeff Cox, Greg Iacurci, Gabriel Cort, Elsa Ohlen, Spencer Kimball, Catriona Marangi, Sarah Whitten, Jessica Dickler, Annie Nova, Stephanie Dhue, and Annika Kim Constantino contributed to this report.
Caleigh Keating assisted in the production of this newsletter. Josephine Rozzelle edited the content of this issue.
