Before the Bell: Microsoft Adds AI to Bing; a Manchester United Buyout
Premarket action on Wednesday had the three major U.S. indexes trading lower. The Dow Jones industrials were trading down 0.25%, the S&P 500 was down 0.32% and the Nasdaq was 0.19% lower.
Eight of 11 market sectors closed higher Tuesday, with energy (3.08%) and communications services (2.48%) posting the day’s largest gains. Consumer staples (−0.36%) and real estate (−0.31%) gave up the most. The Dow closed up 0.78%, the S&P 500 up 1.29% and the Nasdaq up 1.9%. Two-year Treasuries added three basis points to close at 4.47%, and 10-year notes closed up four basis points to close at 3.67%. Oil gained 1.3% and traded up by a like amount early Wednesday morning.
Tuesday’s trading volume was below the five-day average. New York Stock Exchange winners led losers by 1,909 to 1,154, while Nasdaq advancers led decliners by about 3 to 2.
The weekly report on commercial crude oil inventories is due after markets open Wednesday. The American Petroleum Institute reported a crude oil drawdown of about 2.2 million barrels last week, while gasoline inventories rose by almost 5.3 million barrels.
On Thursday, we will get the weekly report on claims for unemployment benefits, and the preliminary reading on the University of Michigan consumer sentiment index is due out Friday.
Among S&P 500 stocks, Skyworks Solutions Inc. (NASDAQ: SWKS) added 12.5% Tuesday, following a solid fiscal first-quarter earnings report and an announced $2 billion share buyback. Incyte Corp. (NASDAQ: INCY) dropped 4.03%, even though the earnings report was better than analysts expected. Share prices fell after one analyst questioned the company’s calculations of gross and net revenue for its Opzelura drug.
Calling it a “new day in search,” Microsoft Corp. (NASDAQ: MSFT) CEO Satya Nadella introduced a new version of the company’s Bing search engine that incorporates an upgraded version of ChatGPT, OpenAI’s chatbot that shot artificial intelligence to the forefront of marketing programs everywhere. Alphabet Inc. (NASDAQ: GOOGL) introduced its AI-juiced search engine on Monday, and Beijing-based Baidu Inc. (NASDAQ: BIDU) introduced its AI chatbot, dubbed ERNIE, a sort-of acronym for “Enhanced Representation through Knowledge Integration.”
AI-enabled Bing was live Tuesday, but users had to be using Microsoft’s Edge browser and were only able to ask the bot one of a handful of preset questions. Baidu said it would introduce Ernie in March as a standalone application before incorporating it in the company’s own search engine.
AI announcements are certainly good for stock prices. Baidu’s stock added more than 12% on Tuesday, Microsoft added 4.2% and Alphabet added 4.6%.
Shares of English Premier League soccer club Manchester United PLC (NYSE: MANU) traded up almost 18% Wednesday morning following reports that a group of individual investors from Qatar will make a bid to buy the team from the Glazer family. The stock had traded down by about 10% until late November, when the Glazer family indicated that the club might be sold.
The family acquired the club in 2005 for £790 million (about $947 million in current dollars). A buyer would likely pay £4.0 billion to £4.5 billion ($4.8 billion to $5.4 billion) and possibly more. According to a rating of sports franchises, the team is valued at $4.6 billion, tied for 19th in a ranking of the world’s most valuable teams. It is the third-most valuable soccer team, trailing Real Madrid ($5.1 billion) and FC Barcelona ($5 billion). The most valuable sports team in the world is the Dallas Cowboys at $8 billion.
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