Article published at 9:00 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:
- Tech extends Thursday losses
- Oil prices unsteady amid threats to Strait of Hormuz transit
- Apple, Microsoft shares shaky after price hikes
Erratic trading could rule the day again, as tech stocks command the limelight after a topsy-turvy week in which investors worldwide continue to question the wisdom of the AI boom given returns on investment are still in question.
The tech-heavy Nasdaq Composite is on another downward slide in the early going, on track to finish the week after four days in the red. Among the chief reasons looks to be a New York Times report that OpenAI is considering tabling its initial public offering until next year, given the rocky trading results of SpaceX’s IPO.
Globally, AI jitters also again struck the Kospi Index, South Korea’s benchmark, ending the session down 5.8% after a 20-minute trading halt. Japan’s Nikkei backpedaled by more than 4%, mostly dragged by Softbank Group’s 13% dive. Softbank is one of OpenAI’s leading backers.
The Nasdaq is falling back some 1.5% while the S&P 500 is giving back about 0.62%. The Dow Jones Industrial Average, however, is struggling to take a stance, edging in and out of positive territory. Given what’s happening early on, the Nasdaq and S&P could chart weekly losses while the Dow might scrape out a small gain.
Ahead of today’s closing, Nasdaq had given up more than 7% on the week. Let’s remember that the past few weeks have been marked mostly by their intraday volatility. What you see early in the day may not mirror what you see at the close. Keep watch.
Shippers’ confidence in transiting the Strait of Hormuz was sharply shaken after Iran attacked a cargo ship Thursday, only two days after the International Maritime Organization was putting evacuation routes in place for the hundreds of ships trapped in the Stair of Hormuz. After the attack, all evacuation plans were put on hold until the IMO said it could confirm safe passage, according to the Wall Street Journal.
As a result, oil prices continue on an unpredictable path toward pre-war price ranges it was headed on for most of the week. In recent action, WTI crude was moving under and over the $70 a barrel range. Keep an eye on the movement, given the ups-and-downs with the U.S./Iran negotiations over the last two weekends. Trading might tame down amid nervous investors who might want to flatten trades before the bell rings.
Apple shares took a drubbing yesterday, giving up 6% after substantially hiking prices on its iPhone and MacBooks. The electronics maker said the escalating costs of memory and storage are forcing it to boost prices from 17% to 25% on a handful of products. Microsoft also lifted prices on its Xbox console series and its stock, too, was punished for it, backtracking 3.5%.
What’s more, Apple left the door open to more price upturns down the road, noting that it had “reached a point where we need to begin raising prices on a number of products.” Though the stock reached a 52-week peak at the beginning of this month and is leaning slightly positive early on, its stock has taken a number of tumbles since and is barely 1.5% higher than it was at the start of the year.
Microsoft stock, once the stock investors flocked to buy on the dip, has had a bruising year, down more than 29% year-over-year. Both Microsoft was tracking higher in the early going.
Good trading!
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