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Market Highlights
U.S. stocks slumped on Wednesday after the U.S. Federal Reserve held key interest rates unchanged as widely expected, and revised economic projections higher with warnings that the battle against inflation was far from over.
All three major U.S. stock indexes retreated in the wake of announcement, with interest rate sensitive megacap stocks Microsoft Corp, Apple Inc and Nvidia Corp pulling the Nasdaq down most.
The Fed's announcement was accompanied by its Summary Economic Projections (SEP) and dot plot, which sees an additional 25 basis point rate hike this year, peaking in the 5.50%-5.75% range. The SEP projections also called for 50 basis points of rate cuts next year.
Marketing automation company Klaviyo advanced 9.2% in its debut on the New York Stock Exchange, the third recent initial public offering in recent days, following Arm Holdings and Maplebear Inc
Volume on U.S. exchanges was 9.73 billion shares, compared with the 10.07 billion average for the full session over the last 20 trading days.
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The U.S. Federal Reserve held interest rates steady on Wednesday but stiffened a hawkish monetary policy stance that its officials increasingly believe can succeed in lowering inflation without wrecking the economy or leading to large job losses.
The Fed's benchmark overnight interest rate may still be lifted one more time this year to a peak 5.50%-5.75% range, according to updated quarterly projections released by the U.S. central bank, and rates kept significantly tighter through 2024 than previously expected.
Even as inflation declines for the rest of 2023 and in coming years, the Fed anticipates only modest initial reductions to its policy rate. That means the expected half percentage point of rate cuts in 2024 would have the net effect of raising the inflation-adjusted "real" rate.
While Powell said the Fed was "in a position to proceed carefully" with future policy moves, he also made clear the jury was, to some degree, still out on the central bank's fight to contain the worst outbreak of inflation in 40 years.
"We want to see convincing evidence really, that we have reached the appropriate level" of interest rates to return inflation to the Fed's 2% target, a judgment its policymakers have not yet made, Powell told reporters.
Arm Falls After Bernstein Downplays Company’s AI Prospects
Arm Holdings Plc shares fell on Monday after Bernstein started coverage on the newly public chip designer with an underperform rating, suggesting it may not be the beneficiary of artificial intelligence that some investors expect.
The stock fell as much as 9.4% to $55.02, below the $56.10 price it opened at following its Thursday initial public offering. However, it pared much of that decline and ended down 4.5% to close at $58. Bernstein’s price target of $46 implies additional weakness.
While expectations that Arm will be a beneficiary from AI growth may be adding a premium to the share price, we believe it is too soon to declare them an AI winner,” wrote analyst Sara Russo.
Bernstein is only the third firm to start coverage on Arm, and so far ratings are evenly distributed.
OpenAI unveils Dall-E 3, latest version of its text-to-image tool
OpenAI on Wednesday unveiled Dall-E 3, the latest version of its text-to-image tool that uses its wildly popular AI chatbot ChatGPT to help fill in prompts.
Dall-E 3 will be available to ChatGPT Plus and Enterprise customers in October via the API, the company said. Users can type in a request for an image and tweak the prompt through conversations with ChatGPT.
"DALL-E 3 can translate nuanced requests into extremely detailed and accurate images," the company said in a statement.
AI Startup Corti Raises $60 Million to Take on Microsoft in Health Care
Corti ApS, a medical software startup, has raised $60 million to sell an AI “co-pilot”to more hospitals and compete with Microsoft, Amazon and othertech giants racing into health care.
Corti’s system is designed to transcribe calls made to emergency medics or doctor’s offices and then automate the paperwork process. That can include preparing the documents needed for patient care and insurance — and even offering guidance to medical professionals. Corti said it currently provides services to 60 hospitals and health networks across Europe, the UK and US.
European venture firms Atomico and Prosus Ventures led the financing, valuing Corti at $260 million.
Chinese EV maker Nio releases a smartphone
Chinese electric car brand Nio on Thursday released an Android smartphone, which the company expects at least half its users to buy, CEO William Li told CNBC in an exclusive interview ahead of the launch.
The phone, priced from around $900 to $1,000, is an Android device that’s about $150 cheaper versus a comparable Huawei phone, Li said in Mandarin.
Nio is the first high-end Chinese electric car brand to release its own smartphone, which Li said the company developed in about a year. Electric car companies in China have sought to make in-car entertainment and mobile phone connectivity a selling point for their vehicles.
Huawei wants to go all in on AI for the next decade
For the first time in about 10 years, the Chinese tech and telecoms giant announced its new strategic direction on Wednesday, saying it would shift its focus to AI. Previously, the company had prioritized cloud computing and intellectual property, respectively, over two decade-long periods.
Meng Wanzhou, Huawei’s rotating chairwoman and chief financial officer, made the announcement in Shanghai during a company event.
Toshiba says $14 bln takeover bid by JIP has succeeded
Toshiba said on Thursday that a $14 billion tender offer from private equity firm Japan Industrial Partners (JIP) had ended in success - a deal which paves the way for the embattled industrial conglomerate to go private.
The JIP-led consortium saw 78.65% of Toshiba shares tendered, giving the group a majority of more than two thirds which would be enough to squeeze out remaining shareholders.
Shares of YG tumble over 13% after report three Blackpink members will not renew contracts
Shares of K-pop agency YG Entertainment tumbled 13.28% on Thursday after South Korean media reported that three of the four members of girl group Blackpink will not sign new contracts with the label.
The stock closed at hit its lowest level in almost five months and closed at 69,200 won ($51.68) per share , its lowest level since its May 11 close of 66,700 won.
Riddle
Question: A well-known proverb has been split up into groups.
Rearrange the groups to form the proverb.
What is it?
BIRD FEAT HERF LOCK SOFA THER TOGE
PARTNER
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Hollywood studios, and writers near an agreement to end the strike.
Writers and producers are near an agreement to end the Writers Guild of America strike after meeting face-to-face on Wednesday, people close to the negotiations told CNBC.
The two sides met and hope to finalize a deal on Thursday, the sources said. While optimistic, the people noted, however, that if a deal is not reached the strike could last through the end of the year.
On Wednesday evening, the WGA and the Alliance of Motion Picture and Television Producers released a joint statement that the two groups met for bargaining and would meet again on Thursday.
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