As expectations for a strong quarterly earnings season were dashed by major bank reports, stocks ended Friday’s trading session neutral. Nonetheless, following a challenging start to 2024, the S&P ended the week in positive position.
The Dow Jones Industrial Average (^DJI) had a loss of over 100 points, or 0.3%. The tech-heavy Nasdaq Composite (^IXIC) finished just above the flatline, while the benchmark S&P 500 (^GSPC) increased by 0.1%.
Fourth-quarter profits from Wall Street lenders began trading today, marking a critical opportunity for equities to recoup from this year’s losses thus far. Wells Fargo (WFC), Bank of America (BAC), and JPMorgan Chase (JPM) all released respectable earnings on Friday. However, the latter two suffered a decline in shares since they were unable to calm concerns about possible future suffering.
To end the week, the markets hammered airline stocks. While American Airlines (AAL) and Delta (DAL) had decreases of about 9%, United Airlines (UAL) saw a decline of more than 10%. Although the firm outperformed projections for both its top and bottom lines when it released its profits earlier in the day, Delta did lower its profitability outlook for 2024. In other news, Meta (META) recovered from a sharp decline in its stock price in 2022 and almost completed a spectacular reversal, hitting a 52-week high in intraday trade. The social media business is only 2% away from its peak.
Also under consideration, following the US and its allies’ airstrikes against the Houthi rebels in Yemen, which prompted threats of retaliation from the Iran-backed group behind Red Sea, oil prices surged by more than 1%.
Investors are searching for further information on pricing pressures in the interim after Thursday’s hotter-than-expected December CPI data. The Producer Price Index reversed course on Friday, revealing an unanticipated drop in prices last month, raising expectations that inflation will continue to decline in the coming months.
For Apple stockholders, the year hasn’t started off well. However, the business is expected to report a profitable week following some difficulties in the early trading days of 2024.
Three banks’ analysts lowered the company’s shares in recent days due to worries about the weakening demand for iPhones. Following the first round of negative press, the internet giant’s shares fell, losing almost 5% of their worth, or over $170 billion, right as market observers were getting excited about the new year.
Redburn Atlantic analyst James Cordwell released the most recent negative note earlier this week. He repeated his bearish views on the company, stating that there will likely be no upside in the upcoming years, and he predicted a “unexpectedly underwhelming March quarter.”
The startup OpenAI, which created the revolutionary AI chatbot ChatGPT, expanded on its public argument for reconsidering intellectual property in the AI era this week.
“Training AI models using publicly available internet materials is fair use, as supported by long-standing and widely accepted precedents,” OpenAI wrote in a blog post in response to the New York Times’ lawsuit alleging copyright infringement against it and Microsoft (MSFT). This idea, in our opinion, is essential to inventors, fair to creators, and vital to US competitiveness.”
“It would be impossible to train today’s leading AI models without using copyrighted materials,” the company stated in a response to a UK Parliament inquiry late last year. “This is because copyright today covers virtually every sort of human expression — including blogposts, photographs, forum posts, scraps of software code, and government documents.”
The originality of the discussion is what lends attention and significance to OpenAI’s claims.
The extent to which AI and the process of consuming existing material to train potent models that seek to produce and capture new sorts of value are addressed by current copyright legislation is uncertain.
However, in a seemingly common approach in the IT sector, AI corporations are behaving as though their lax interpretation of the law is the default mode of operation and as though limitations don’t apply to them unless they are shown to be incorrect.
This tactic is similar to social media firms avoiding genuine moderating duties and yet making money by posting other people’s stuff. It also reminds me of the early days of gig economy and ride-sharing, when well-known applications raced to gain market share despite functioning illegally.
Furthermore, since both sectors are growing while the law is still pending, AI businesses must consider this: Why play it safe when the odds are in your favour?
The New York bank stated that it plans to cut 20,000 jobs by 2026, saving the company $2.5 billion, according to David Hollerith of Yahoo Finance. When Citigroup lists its Mexican consumer division Banamex in an IPO, it plans to cut an additional 40,000 jobs.
With 180,000 employees remaining after the layoffs, Citigroup would become the smallest of the US’s Big Four banks and would have 25% fewer employees overall. By 2023, it had 240,000.
The statement coincided with Citigroup’s fourth-quarter net loss of $1.8 billion, which was attributed to various charges and reserves already announced, as well as an FDIC assessment of $1.7 billion.
As US-led airstrikes against Yemen’s Houthi rebels heighten the possibility of new conflicts and increase market volatility, tensions in the Middle East continue to grow.
Following the US and UK military-coordinated airstrikes, oil prices increased by 2% during Friday morning trade. The assaults were a reaction to Houthi attacks on Red Sea cargo boats, which compelled international shipping corporations to reroute their ships, increasing the time and cost of the journeys.
The fastest route for ships to travel between Europe and Asia is via the Red Sea, which empties into the Suez Canal. Approximately 10% of all worldwide trade passes via the important international maritime lanes.
BlackRock (BLK) said on Friday that at the conclusion of the fourth quarter, its assets under management exceeded $10,000,000,000,000. The market upswing from the previous year allowed client assets to cross this level for the first time in the previous two years.
As of December 31, the firm’s AUM was $10,008,995,000,000, to be exact.
BlackRock saw net inflows of $289 billion in 2023, with the second-best quarter of the year occurring in Q4 due to the $96 billion in assets that came into the company’s offerings. A net worth of almost $110 billion was transferred into BlackRock vehicles in Q1.
BlackRock said on Friday that it has paid $12.5 billion to acquire infrastructure fund manager GIP in addition to releasing its quarterly results. More than $100 billion in assets are managed by GIP.
Early on Friday, JPMorgan (JPM) released its fourth-quarter earnings, capping an incredible year for the biggest bank in the nation.
Additionally, Jamie Dimon, the company’s vocal CEO, gave investors another comprehensive perspective on the US and worldwide economies in the company’s fourth quarter report.
The majority of Dimon’s remarks reinforced his belief that investors are overconfident in the notion that inflation will easily return to the Federal Reserve’s 2% target and that interest rates will continue to rise above projections. He claimed that a variety of “unprecedented” market factors mean the bank “must be prepared for any environment.”