Stocks are experiencing significant declines this month due to a combination of factors, including surging bond yields, rising oil prices, and slowing economic growth. Investors are particularly concerned about the impact of rising energy prices on inflation, as higher inflation may lead the central bank to raise borrowing costs. Additionally, investors are dumping bonds, resulting in yields on 10-year Treasury bills reaching a 16-year high. The fading tech rally, particularly in large-cap tech stocks associated with artificial intelligence, is also contributing to investor worries. Micron, a chip maker aiming to become a larger supplier to Nvidia, reported a quarterly loss, further dampening investor sentiment.
The current market turmoil has the potential to further pressure President Biden’s approval ratings, especially regarding his handling of the economy. A wave of strikes and the possibility of a government shutdown are adding to the bleak mood. Hollywood studios and striking actors are set to resume talks, while the halt in trading of Evergrande’s shares has raised concerns about the potential collapse of the highly indebted Chinese real estate developer. In the US, the Justice Department reportedly broadened its inquiry into Swiss bank breaches of Russian sanctions, with a focus on Credit Suisse. GameStop also made headlines by naming financier Ryan Cohen as CEO in an effort to revive the struggling retailer.
In the tech world, Meta, one of the leading companies in artificial intelligence research, is making a big bet on consumer-facing AI. It has introduced new features for its products, including Instagram and WhatsApp, such as a chatbot assistant and 28 chatbot characters based on celebrities. Meta is leveraging its advantage of having three billion daily users across its apps to differentiate itself from competitors in the AI space. However, the company faces challenges due to concerns about potential misuse of the technology, particularly considering its past issues with misinformation. Despite these challenges, Meta is striving to attract users and stay relevant in the increasingly competitive AI market.
Efforts to avoid a government shutdown are progressing slowly, with hard-line Republicans indicating they will block temporary funding measures proposed by Speaker Kevin McCarthy. A group of House Republicans, led by Matt Gaetz, expressed their refusal to approve a temporary funding plan, even after alternative proposals were made. The disunity among House Republicans increases the likelihood of a government shutdown.
