Wednesday, June 26, 2024

Markets hesitate, waiting for inflation data on Friday

Dow edged up 15, decliners over advancers about 3-2 & NAZ added 87.  The MLP index stayed in the 286s & the REIT index was off 1+ to the 372s.  Junk bond funds drifted lower & Treasuries continued to see selling which increased yields.  Oil was about even just under 81 & gold pulled back 20 to 2310 (more on both below).

Dow Jones Industrials 

Nvidia (NVDA) CEO Jensen Huang said that the company’s advantage in artificial intelligence chips was thanks to a bet it made over 10 years ago, centering on Bs of $s in AI investment and a team of thousands of engineers.  His comments came during the question-&-answer period of NVDA's first shareholder meeting since the company's stock began to surge.  Since last year's meeting, the company has been on a historic run: NVDA stock is up 193%, its shares split 10-1, the company passed a $3T valuation & it briefly reached the status of most valuable company in the US.  The first question Huang answered was about the company's competition, as traditional chipmakers & startups release products intended to challenge NVDA's more than 80% market share in AI chips.  Huang laid out the company's overall strategy to maintain its position, leading with the idea that NVDA has already “transformed” into a data-center focused company from its previous gaming focus.  The company is also looking to create new markets for its AI, such as in industrial robotics, & it aims to partner with every computer maker & cloud provider to do so.  Huang said that its AI chips provide the “lowest total cost of ownership,” suggesting that while other chips may be less expensive, NVDA's are more economical considering their performance & cost to run.  Ultimately, Huang said NVDA had achieved a “virtuous circle,” a term in the technology industry that refers to when a platform has the most users, which allows it to make the improvements it needs to attract even more users.  “The NVIDIA platform is broadly available through every major cloud provider and computer maker, creating a large and attractive install base for developers and customers, which makes our platform more valuable to our customers,” Huang added.  The stock rose 31¢.

Nvidia CEO Jensen Huang addresses rising competition at first shareholder meeting since stock surge

Apple (AAPL), a Dow stock, announced that its self-service repair program is now available in Europe.  The program, dubbed Apple Diagnostics for Self Service Repair, gives consumers the ability to test products for optimal parts functionality & identify parts that may need repair without assistance from AAPL or an independent repair provider.  First launched in the US in Dec 2023, the tool now supports 42 AAPL products & is available in 32 European countries, including the UK, France & Germany.  The program will now support iPhone, Mac & Studio Display models in 33 countries & 24 languages.  AAPL said it also plans to expand the service to Canada in 2025.  The company said the self-service repair tool is part of an ongoing effort to extend the lifespan of its products.  “While Apple is committed to providing safe and affordable repair options, designing and building long-lasting products remains the top priority,” AAPL said.  “The best type of repair for customers and the planet is one that is never needed.”  Customers can begin an Apple Diagnostics session on a 2nd product to check the status & performance on a device that may need repair.  After following a series of onscreen prompts, they will learn whether their product needs repairing & which parts may need to be replaced.  The stock rose 4.18.

Apple expands its self-service repair program to Europe

Google (GOOG) is testing facial recognition technology for office security “to help prevent unauthorized individuals from gaining access to our campuses,” according to a description of the program.  The initial test is taking place at one of Alphabet's (GOOG) sites in Kirkland, Washington, a Seattle suburb.   Interior security cameras have been collecting facial data & comparing it to images stored from employee badge images, which includes the extended workforce, to help determine if there are unauthorized people on the premises.  Google’s Security & Resilience Services (GSRS) team will use the data to help identify people “who may pose a security risk to Google’s people products, or locations,” the document says.  “There are protocols in place for identifying, reporting, and potentially removing known unauthorized persons to maintain safety and security of our people and spaces,” it says.  At the Kirkland testing site, people entering the building will not be able to opt out of the facial screening.  However, the document says the data is “strictly for immediate use and not stored,” & that employees can opt out of having their ID images stored by filling out a form.  GOOG said that while ID badge photos were part of the test, they won't be used going forward.  “For many years our security team has been testing and implementing new systems and protections to help keep our people and spaces as safe as possible,” a GOOG spokesperson said.  GOOG stock slid back 21¢.

Google is testing facial recognition technology for campus security, starting at site near Seattle

Gold prices slipped 1% to their lowest level in more than 2 weeks, weighed by a stronger $ & higher bond yields, while traders looked forward to US inflation data due later this week.  Spot gold was down 0.8%, at $2301 per ounce (its lowest since Jun 10) & US gold futures settled 0.8% lower, at $2313.  At this point, market may very well be responding to the firmer $ & the possibility that the Federal Reserve is unlikely to move (interest rates) earlier in the summer.  The $ rose 0.4% to a near 2-month peak against its rivals, making gold more expensive for other currency holders, while benchmark US 10-year yields hit a near 2-week high.  The focus this week will be on the Personal Consumption Expenditures Price Index, the Fed's preferred inflation gauge, which could shed light on the central bank's interest-rate path.

Gold Falls to Two-Week Low as Higher Dollar, Yields Dent Appeal

West Texas Intermediate (WTI) crude oil closed higher, even as a report showed US oil inventories rose last week, on expectations that demand is on the rise.  WTI crude oil for Aug closed up 7¢ to settle at $80.90 per barrel, while Aug Brent crude, the global benchmark, was last seen up 37¢ to $85.38 per barrel.  In its weekly survey, the Energy Information Administration said US oil inventories rose by 3.6M barrels last week, while the consensus estimate called for a 3M barrel draw on stocks.  Gasoline inventories rose, while distillate stocks dropped by 0.4M barrels.  Despite the data. expectations summer demand is strong & rising amid OPEC+ production cuts remains the dominant theme in the market.  The current view is that demand will increase during the summer & with OPEC+ cuts fully in place until Oct global & OECD stocks ought to deplete.  Thus, convincing stock draws in the US would go a long way to bolster this optimism.  Last night's API data was unfavorable.  Both crude oil & gasoline went against forecasts & built, & distillate inventories recorded a surprise plunge.  If the data set is confirmed by the EIA today the retracement might last longer than anticipated.  A rising $ is checking oil prices, with the ICE dollar index last seen up 0.45 points to 106.05, the highest since Apr 30, ahead of the release of the Personal Consumption Expenditures Index (PCE) on Fri, the Federal Reserve's preferred inflation measure.

WTI Crude Oil Closes Higher Despite a Report Showing an Unexpected Rise in U.S. Inventories

Dow was down in early trading but then stayed near breakeven for the rest of the session.  The stock market is looking to economic statistics for cues ahead of the key PCE inflation data on Fri.  Monthly data will not solve problems, but all clues & signals about the future are welcomed by investors.

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