Article published at 9:05 a.m. CT
JJ Kinahan is Senior Vice President, Head of Retail Expansion and Alternative Investment Products at Cboe Global Markets, Inc. (Cboe).
Key Takeaways:
- Alibaba spooks investors with $10.2 billion share sale
- Investors sour on Samsung’s shareholder-return plan
- Nvidia’s earnings on Wednesday’s agenda
The markets are mixed in early trading today as technology stocks fall ahead of a week packed with headline-making events.
Alibaba and Samsung prompted the tech selloff that is pulling the Nasdaq Composite down 0.66% in early trading. The S&P 500 Index is losing 0.29% but the Dow Jones Industrial Average moved into positive territory, up 0.16%. Though Friday’s session ended to the upside, it wasn’t enough to cover losses earlier in the week fueled primarily by long Treasury yields and the national debt hitting $40.11 trillion.
Alibaba’s U.S. shares are tumbling nearly 1% after it sold shares to raise $10.2 billion aimed at artificial intelligence (AI) investments. Not only does a move like that dilute shares, but analysts are asking why the Chinese-based tech giant raised funds with shares rather than a bond offering. That opens the possibility of the firm coming back with a bond offering to raise more funds as Alibaba looks to lead AI growth.
Samsung shares are dropping 8.7% after the South Korean manufacturer announced a new shareholder-return plan investors didn’t like.
Chipmakers taking a tumble in the early going include Marvell, down 3.5%, Advanced Micro Devices off 1.9% and Intel dropping 2.3%. Memory stocks are also falling with Sandisk off 5.8%, Coherent lower by 5.7%, Western Digital by 4.3%, Seagate losing 3.7% and Micron giving back 3.7%.
Investors are prepping for what could be a volatile week of events ranging from government reports on consumer spending and inflation to big earnings releases from the likes of Nivida, Marvell and a handful of retailers.
Top of mind for many investors will be Nvidia’s results, which come out after the bell Wednesday. Expectations are high as many hope Nvidia can provide assurances that the AI investments are working and accelerating. This could become a momentum play and reflect much of what folks are thinking. The implied volatility is 6% in either direction, but could change as we move closer to the release. Stay tuned.
The Federal Reserve Bank of Kansas‘s annual economic policy symposium at Jackson Hole will be another focus this week. Federal Reserve Chair Kevn Warsh is on Friday’s agenda. He isn’t expected to offer any insight on the Fed’s interest-rate thinking, but could focus on broader economic issues such as productivity and demographics, according to published reports.
Happy Trading!
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