CNBC Daily Open: The Nasdaq soared last week. But tech might be in trouble
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The Nasdaq Composite outpaced other indexes last week. But not all is rosy in tech.
- China wants to hit "around 5%" growth in 2023. That's the word from Premier Li Keqiang, who spoke at China's National People Congress yesterday. A draft budget at the congress revealed the country will boost defense spending by 7.2% to 1.56 trillion yuan ($230 billion).
- Stocks in the U.S. rose on Friday as all major indexes closed higher while Treasury yields dipped. Asia-Pacific markets traded mixed Monday. China's Shanghai Composite fell 0.24% as investors digested the country's modest growth target for this year.
- Bard, Google's artificial intelligence engine, is "not search," Jack Krawczyk, the product lead for Bard told Google employees. Bard's magic, instead, is more a "creative companion." Employees told CNBC they're confused by Google's sudden pivot.
- Amazon paused construction of "HQ2," its supposed second headquarters, in Virginia. The company will also close eight of its Go convenience stores. CEO Andy Jassy has been cutting expenses, laying off more than 18,000 employees.
- PRO This week, Federal Reserve Chair Jerome Powell will speak about the economy before Senate committees, and the February employment report will come out. Economists expect one of those to be a major market mover; the other, not so much.
Helped by Fed official Raphael Bostic's dovish comments and a retreat in Treasury yields, U.S. stocks managed to shrug off their pessimism and rallied to end the week in the green.
The Dow Jones Industrial Average rose 1.17%, giving it a 1.75% weekly gain that broke its four-week losing streak. The S&P 500 gained 1.61%, a 1.9% weekly increase on the week. The tech-heavy Nasdaq Composite climbed 1.97%, ending the week 2.58% higher. That makes two straight months that the Nasdaq has outpaced the other indexes.
Not that all is rosy in the tech industry. Amazon stopped building "HQ2." Meanwhile, Meta's throwing more money at its loss-incurring Reality Labs segment. The firm slashed the cost of its virtual reality headsets — by up to $500 on its higher-end Meta Quest Pro — in an attempt, perhaps, to boost sales.
Not all is well in the much-vaunted realm of the artificial intelligence chatbots, either. Google abruptly pivoted from its search-first strategy to position Bard as more of a companion to "explore your curiosity," Krawcyzk told employees, which left them scratching their heads.
Maybe it's just really hard to integrate unpredictable AI chatbots with something as fact-based as web search. Recall the fiasco surrounding Microsoft's AI chatbot Bing, which threatened users and professed its love to them. (To Bing's credit, that's remarkably human behavior.)
Despite the Nasdaq's stellar showing so far this year, then, it remains to be seen if the promises of tech match reality — and translate into further gains for the index. Companies should be careful not to dither too long: In today's high interest rate environment, investors don't have as much patience as they did a few years ago.
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