JJ Kinahan is Senior Vice President, Head of Retail Expansion and Alternative Investment Products at Cboe Global Markets, Inc. (Cboe).
Key Takeaways:
- Tech unable to rebound after Friday’s selloff
- Crude oil price falls amid hopes of Iran peace talks
- Marvell and Lumentum shares fall
Another day, another focus on technology and semiconductor companies that investors still don’t seem to fully embrace. The market initially regained some footing after Friday’s selloff, but lost momentum as the clock ticked down.
Investors may also have taken a cautious stance ahead of tomorrow’s election as they wait for clarity on a number of issues. The Financial Times reported investors were bracing for the “most consequential” midterm election in years and putting new positions on pause, “with results expected to set the direction of everything from statewide AI policies to federal spending.”
We saw a decline in the oil patch today on hopes that Iran peace talks are really at hand this time, despite what was reported as a tough weekend of negotiations. It’s hard to tell whether this is real progress or fleeting momentum that we’ve seen before. But a diplomatic opening seemed to appear when Iran’s president said he has granted his government “certain authorities” to pursue further dialogue with the U.S., according to CBS News. Investors pounced, pushing WTI Crude Oil prices down 7.18% to the mid-$96-per-barrel range.
All of this may have affected the Cboe Volatility Index® (VIX® Index), which dipped to 18 intraday but found its way nearly 11% higher to finish at 21.54.
When the market settled, the tech-laden Nasdaq Composite and the S&P 500 Index had given up their 1.4% and 1.1% early gains to shed 1.07% and 0.51%, respectively. The Dow Jones Industrial Average also lost some energy but finished up 0.41%.
Marvell and Lumentum shares fell after they confirmed last week’s rumor that Marvell is buying the optical technology maker for $115 billion in an all-stock deal. Optical technologies are needed to allow artificial intelligence (AI) data to travel at high speeds and represent a “fundamental architectural shift toward optical connectivity,” according to Marvell.
This also marks a shift in artificial intelligence (AI) investments, which we will continue to watch. Investors and analysts appeared wary of the timing and the stock dilution, given the recent shifts away from AI investments amid risk-reward questions, according to Barron’s. While the acquisition is considered a “bet” on AI demand and buildout, a Morgan Stanley analyst questioned “the attractiveness of pursuing such a large acquisition at potentially peak cyclical conditions,” the Barron’s report stated. The acquisition also faces regulatory hurdles that may take 14 to 20 months to clear. Marvell shares fell 12.7% and Lumentum gave back 18.6%. This is one we will also keep track of.
Oracle shares fell 8.8% after the software giant revealed in a regulatory filing its plans to raise $20 billion through bond and share sales, mostly to fund AI and cloud infrastructure buildout. Intel shares gave back 8.8% and have lost nearly 36% in the last six months. Nvidia fell 1.26% and Advanced Micro Devices retreated 4.47%.
After the bell, Apple reported fourth-quarter earnings that beat Wall Street’s sales and profit expectations. Gross margins were 47.9%, and the company has $136.94 billion in cash, according to the report. Apple shares bounced in and out of negative territory during the conference call.
Happy Trading!
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