U.S. stocks close: Fed officials join forces to fight inflation, Google AI made a "low-level mistake" and the stock price tumbled

Cai Lian News, February 9 (Editor Niu Zhanlin) On Wednesday, Eastern time, a number of Fed officials made speeches, saying that they needed to continue to raise interest rates to fight inflation, which led to the market under pressure and technology stocks fell first.

From New York Fed President Williams to Minneapolis Fed President Kashkari to Fed Governors Waller and Cook, the message is clear: the Fed needs to continue to tighten monetary policy enough to bring inflation back to its 2% target.

Williams, the Fed's "third in command," said the Fed needs to take a sufficiently strict stance on policy to reduce inflation, and the view that the terminal interest rate at 5-5.25% is reasonable.

Kashkari pointed out that wage growth is now too strong to support inflation back to 2% and needs to continue to raise interest rates, which most of my colleagues expect to rise above 5%, and of course higher.

Waller warned that the work to curb inflation was "not done" and could be a "protracted battle" that would result in higher rates than the market expected.

Krishna Guha, an analyst at Evercore ISI, believes that Fed officials are clearly trying to attract the attention of the market and counter the market's dovish interpretation of Powell's remarks.

And their recent spate of hawkish comments has really had an effect, with the interest rate options market's view of Fed policy shifting, with multiple large bets this week that the Fed's policy rate will rise to 6%, which is nearly a percentage point higher than the current market consensus.

Lisa Charlett, CIO of Morgan Stanley Wealth Management, claimed publicly on Wednesday that a sharp rally in the stock market, in addition to creating a huge disconnect from fundamentals, also threatens market stability, amid deteriorating corporate earnings and economic expectations.

Market dynamics

By the close, the Dow was down 207.68 points, or 0.61%, at 33,949.01, the NASDAQ lost 203.27 points, or 1.68%, to 11,910.52 and the S&P 500 was down 46.14 points, or 1.11%, at 4,117.86.

The 11 sectors of the S&P 500 index collapsed across the board, with telecom services closing down 4.13% the worst performer, information technology/technology down more than 1.2%, utilities down more than 1.7%, consumer discretion, energy, consumer goods, and raw materials all down more than 0.8%, and real estate down nearly 0.3%.

U.S. stock industry ETFs closed down across the board, with the smallest global aviation ETF also down 0.24%, healthcare ETF down 0.29%, financial ETF down 0.57%, and banking ETF down 0.75%; The biggest losers tumbled 2.38 percent, the biotech index fell 2.19 percent, the utilities ETF fell 1.68 percent, the technology ETF fell 1.21 percent, the regional banks ETF fell 1.13 percent, and the global technology ETF fell 1.05 percent.

Popular stock performance

Popular tech stocks mostly fell, with Meta Platforms down more than 4 percent, Amazon down 2.02 percent, Microsoft down 0.3 percent, Netflix up 1.07 percent, and Tesla up more than 2 percent.

Google's highly anticipated AI chatbot Bard made a factual mistake that sent Google's stock tumbling, closing down about 7.7%.

CVS has reached an agreement to acquire Oak Street Health for approximately $10.6 billion, which will be funded through existing resources and existing financing capacity, and is expected to close this year. The company's shares rose 3.5 percent and Oak Street Health rose 4.6 percent.

Shares of the English soccer club rose nearly 11 percent after reports emerged that Qatari investors might bid for English football club Manchester United, on track for one of its best days ever.

Popular Chinese concept stocks fell, with the Nasdaq China Golden Dragon Index down 1.70%. Futu Holdings fell nearly 6%, Baidu, Xpeng Motors, iQiyi fell more than 4%, Bilibili and JD.com fell more than 3%, Weibo, NIO, Pinduoduo fell more than 2%, Li Auto and Vipshop fell more than 1%, and Tencent Music, Alibaba, and Manbang fell slightly. Zhihu and NetEase rose slightly.

Company news

[Microsoft's acquisition of Activision Blizzard adds resistance! ] UK regulator says deal hurts market competition]

On Wednesday, local time, the British anti-monopoly regulator said that after in-depth investigation, they initially believed that Microsoft's acquisition of Activision Blizzard would damage competition in the game market. Britain's Competition and Markets Authority (CMA) said the deal could weaken important competition between Microsoft's Xbox and Sony's PlayStation consoles, as well as stifle competition in the nascent cloud gaming market. CMA said the evidence it analyzed suggested that Microsoft would make Activision's Call of Duty game exclusive on its Xbox platform for commercial reasons, which would hit rivals such as Sony.

【Google AI chatbot answers questions incorrectly】

Earlier, Google's artificial intelligence chatbot Bard gave incorrect answers to questions raised by users at a press conference. A question asked, "What can I tell a 9-year-old about the James Webb Space Telescope (JWST)?" Bard gave a number of answers, including the fact that the first photographs of extrasolar planets were taken with JWST. However, this answer is inaccurate. According to NASA, in 2004, the European Southern Observatory's Very Large Telescope (VLT) took the first photographs of exoplanets. Google's new AI tool, Bard, made a factual mistake, fueling concerns that the tool in question isn't ready to be integrated into search engines.

[Netflix to promote the shared account function to more countries]

U.S. streaming company Netflix said it is rolling out the shared account feature to more countries, followed by the launch of the service in Canada, New Zealand, Portugal and Spain, which is now used by 100 million users worldwide.

Credit Suisse plans $380 million bonus pool for restructuring-related executives

Credit Suisse has prepared a "transformation bonus" for the top 1 percent of employees, equivalent to about 500 executives, to maintain morale during the company's reforms, the Financial Times reported on Wednesday, people familiar with the matter said. If executives push the company to complete the restructuring, they will enjoy a $380 million prize pool. This "transformation award" will be voted on as part of the compensation report at the annual meeting on April 4.

[Disney's first-quarter revenue is $23.51 billion, analysts expect $23.39 billion]

Disney's first-quarter revenue was $23.51 billion, compared with analysts' expectations of $23.39 billion; Disney+ subscribers in the first quarter were $161.8 million, versus $164 million; adjusted earnings per share in the first quarter were $0.99 versus analysts' expectations of $0.74; and first-quarter theme parks, experiences and consumer goods revenue was $8.74 billion.

(Cai Lian News Niu Zhanlin)