Stan Choe
US stocks are climbing as investors digest Anthropic’s filing for its initial public offering and look forward to key big tech earnings this week.
The S&P 500 rose 0.8 per cent and more than recovered its losses from last week, pulling within 1.6 per cent of its all-time high set earlier this month. The Dow Jones Industrial Average was up 154 points, or 0.3 per cent, and the Nasdaq composite was 1.1 per cent higher.
The Australian sharemarket is set to edge up, with futures pointing to a rise of 11 points, or 0.1 per cent, at the open. The ASX added 0.2 per cent on Monday. The Australian dollar was trading at US70.25¢.
Anthropic PBC filed for its long-awaited IPO, a landmark moment in the artificial-intelligence industry that is growing ever-hungrier for cash to power ahead.
The company behind Claude expects to begin trading on the Nasdaq Global Select Market under the symbol ANT, a filing with the US Securities and Exchange Commission showed. Anthropic filed confidentially in June for a listing.
Investors are telling bankers on the deal that their estimate of a fair valuation has shifted down to around $US1.4 trillion to $US1.5 trillion ($2-$2.1 trillion) following the company’s investor day, according to people familiar with the matter. A valuation of closer to $US1.75 trillion is potentially achievable, some of the people said, asking not to be identified as the information isn’t public.
The strongest lift for the market came from Nvidia, which rose 2.5 per cent. That helped the chip company recover some of its drop from three straight losing weeks, its longest such streak since June, and maintain its position as the largest stock on Wall Street above Apple.
But stocks elsewhere in the artificial-intelligence industry remained unsettled. They’ve been swerving on worries about whether their industry’s boom is under threat because of how expensive it’s become for companies to borrow money to build data centres and buy more AI chips.
Stocks are recovering their losses from last week ahead of a number of earnings reports this week from big companies, including Amazon and Intel.
Meta Platforms bounced up and down after outlining plans to raise $US35 billion by selling stock to help pay for its AI investments. It also said it could raise another $US60 billion by selling shares of a new class of its stock once it begins trading. Meta’s stock initially dropped more than 2 per cent, but it quickly flipped to a gain and then pulled back to a loss of 0.2 per cent.
Meta said Nvidia, Advanced Micro Devices and Broadcom have already indicated they may buy a total of $US5 billion of stock in its offering. That’s a signal of strong interest from big chip companies that stand to benefit from additional AI investments. But it also gives fuel to critics of “circular financing” who say it raises the risk if AI isn’t as successful as expected.
SpaceX, Elon Musk’s rocket company that also runs the xAI business, had similar swings. It opened with a loss and then flipped to a gain of 0.9 per cent after it agreed to a roughly $US40 billion deal with an entity managed by Apollo Global Management to lease AI computing power.
Musk warned over the weekend that hundreds of companies that rent out AI computing power are under threat because of the difficulty in borrowing money, saying on his social-media platform, X, that they could face “guppy-level death and consolidation.”
CoreWeave, a company that’s borrowed money to buy AI computing power that it rents to customers, has been at the centre of investors’ worries in recent weeks. On Monday, it dropped 5.5 per cent quickly after trading began, only to flip to a gain of 5.1 per cent. Such minute-to-minute swings have become commonplace for it in recent days.
Profit reports from huge tech companies this upcoming week could offer more details about how spending on AI is going, and whether it’s producing the profits and productivity that proponents promised.
Alphabet and Microsoft will report their latest quarterly results on Wednesday, with Amazon to follow on Thursday.
Companies across all industries are under pressure to report strong growth in their profits. Expectations for big growth are what allowed their stock prices to run to records recently despite worries about high inflation, high interest rates and other concerns.
Verizon Communications fell 2.8 per cent even though it reported a stronger profit for the summer than analysts expected, as its revenue fell short of forecasts.
Roughly one out of every three stocks in the S&P 500 is scheduled to report its latest quarterly results this week.
In stock markets abroad, Brazilian stocks fell sharply after President Luiz Inácio Lula da Silva won reelection in a result that surprised investors.
Other governments around the world are also feeling pressure because of their high debt loads and worries about strained budgets. France has been at the centre of the worries recently following violent protests in the country.
But yields on French government bonds eased Monday, and its CAC 40 stock index rose 0.8 per cent for one of the world’s better moves. Indexes also rose in other European markets following a mixed finish in Asia.
The European Central Bank and the Bank of Japan will be meeting to vote on interest rates later this week.
In the U.S. bond market, yields fell for longer-term Treasurys. The yield on the 10-year Treasury fell to 4.98 per cent from 5.00 per cent late Friday and from more than 5.30 per cent earlier this month.
The two-year Treasury yield edged up to 4.71 per cent from 4.69 per cent late Friday. It more closely tracks expectations for what the Federal Reserve will do with overnight interest rates, and the widespread expectation is that it will say on Wednesday that it is leaving the federal funds rate alone following its latest meeting.
The Fed last month hiked the fed funds rate for the first time in three years in hopes of slowing inflation, which has remained much higher than anyone would like.
The price for a barrel of Brent crude fell toward $US109 in the morning, but it later erased the losses and returned to $US111.40. It remains near the high end of its range since the war with Iran began. The highest price for the most actively traded contract in the market for Brent crude since then is nearly $US120, reached in March.
AP, Bloomberg
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