Hedge funds are dumping stocks at the fastest pace in three months as what’s often called ” the smart money ” stepped up bearish wagers against equities amid the recent pullback. The professionals sold global stocks on a net basis for a second straight week last week, driven almost entirely by short sales, according to Goldman Sachs’ prime brokerage data. It marked the biggest selling week for hedge funds since mid-January, the data showed. Separately, Bank of America’s client data showed a similar trend. Its hedge fund clients sold stocks for a fifth consecutive week last week, exiting shares across small-, mid- and large-cap companies. The market is in the middle of a retreat as investors reassess the Federal Reserve’s path to cutting interest rates. The blue-chip Dow Jones Industrial Average fell 2.3% last week, its worst weekly performance since March 2023. The S & P 500 declined nearly 1%, its biggest weekly loss since early January, although the equity benchmark is still only 1.7% below its 52-week high. .SPX YTD mountain S & P 500 “Valuations are so stretched right now that anything less than perfection from economic data or any geopolitical noise can create substantial and quick selloffs.” said David Bahnsen, chief investment officer at Bahnsen Group. Consumer discretionary stocks were among the worst performing and the most sold U.S. sectors on a net basis last week, Goldman said. The Wall Street investment bank noted that hedge fund managers reduced long positions in the sector every day and shorted retail-focused exchange-traded funds. The SPDR S & P Retail ETF (XRT) dropped 5.5% on the week. One of the biggest drivers of the recent pullback has been a shift in interest rate expectations. The market has again dialed back its outlook for rate cuts this year, seeing a coin flip between two and three reductions, according to the CME Group’s FedWatch gauge of trading in the fed funds futures market. Traders started the year pricing in as many as seven rate cuts for 2024. “We think June is no longer a given for the Fed to start cutting rates — but see rate cuts coming as inflation falls,” Jean Boivin, head of the BlackRock Investment Institute, said in a note Monday. — CNBC’s Michael Bloom contributed reporting.
Check out the companies making headlines before the bell. Micron — The chip stock plunged nearly 13% in premarket trading after the chipmaker issued weaker-than-expected second-quarter guidance. First-quarter revenue was inline with analysts’ expectations, while earnings topped estimates, however. Lamb Weston — Shares of the frozen potato maker sank 18% after posting quarterly results that fell short of estimates on the top and bottom lines. Lamb Weston posted adjusted earnings of 66 cents per share on $1.60 billion in revenue. That fell short of the EPS of $1.01 and $1.67 billion in revenue expected by analysts polled by FactSet. The company also named a new CEO as it faces ongoing pressure from activist investor Jana Partners to switch up its leadership team. Darden Restaurants — The Olive Garden and LongHorn Steakhouse parent jumped 8% after reporting an earnings and revenue beat for its fiscal second quarter. Darden also raised its full-year revenue guidance. It now expects revenue of $12.1 billion, up from its previous guidance of $11.80 billion to $11.9 billion. Analysts polled by FactSet had expected guidance of $11.97 billion. Lennar — The homebuilder sank 10.2% after earnings for the first fiscal quarter missed analyst expectations. Lennar earned $4.06 per share on $9.95 billion in revenue, while analysts surveyed by LSEG had anticipated $4.16 a share and $10.08 billion, respectively. Tesla — The electric vehicle stock added 3% after slumping more than 8% during Wednesday’s session after markets sold off as the Federal Reserve indicated fewer rate cuts next year. Conagra Brands — The packaged food company dipped 2% after lowering its fiscal year outlook. Conagra now sees its fiscal year adjusted earnings coming in at a range between $2.45 to $2.50 per share, lower than its prior guidance of between $2.60 to $2.65 and FactSet’s estimate of $2.58. However, Conagra reported a fiscal second-quarter adjusted earnings and revenue beat versus FactSet consensus. Accenture — The IT services management company surged 7% after topping fiscal first quarter revenue expectations and lifting its full-year guidance. Accenture said it now expects revenues to grow between 4% and 7%, versus a prior forecast of 3% to 6%. Carmax — Shares rose more than 6% after the company’s third-quarter results topped Wall Street’s expectations. Carmax earned 81 cents per share on revenue of $6.22 billion for the period. That’s above the 62 cents per share on revenue of $6.05 billion that analysts polled by FactSet were expecting. Palantir — The artificial intelligence software stock gained nearly 3% after announcing an expanded partnership with the U.S. Army , with a contract worth up to roughly $619 million. Shares had slumped about 4% during Wednesday’s selloff. — CNBC’s Sarah Min, Yun Li, Alex Harring, Michelle Fox, Lisa Han and Sean Conlon contributed reporting
Workers setting up the TuSimple booth for CES 2022 at the Las Vegas Convention Center on Jan. 3, 2022.
Alex Wong | Getty Images News | Getty Images
Embattled Chinese autonomous trucking company TuSimple has rebranded to CreateAI, focusing on video games and animation, the company announced Thursday.
Now, just over two years after CEO Cheng Lu rejoined the company in the role after being pushed out, he expects the business can break even in 2026.
That’s thanks to a video game based on the hit martial arts novels by Jin Yong that’s slated to release an initial version that year, Cheng said. He anticipates “several hundred million” in revenue in 2027 when the full version is launched.
Company co-founder Mo Chen has a “long history” with the Jin Yong family and started work in 2021 to develop an animated feature based on the stories, Cheng said.
The company claims its artificial intelligence capabilities in developing autonomous driving software give it a base from which to develop generative AI. That’s the next-level tech powering OpenAI’s ChatGPT, which generates human-like responses to user prompts.
Along with the CreateAI rebrand, the company debuted its first major AI model called Ruyi, an open-source model for visual work, available via the Hugging Face platform.
“It’s clear our shareholders see the value in this transformation and want to move forward in this direction,” Cheng said. “Our management team and Board of Directors have received overwhelming support from shareholders at the annual meeting.”
He said the company plans to increase headcount to around 500 next year, up from 300.
Cutting production costs by 70%
While still under the name TuSimple, the company in August announced a partnership with Shanghai Three Body Animation to develop the first animated feature film and video game based on the science fiction novel series “The Three-Body Problem.”
The company said at the time that it was launching a new business segment to develop generative AI applications for video games and animation.
CreateAI expects to lower the cost of top-tier, so-called triple A game production by 70% in the next five to six years, Cheng said. He declined to share whether the company was in talks with gaming giant Tencent.
When asked about the impact of U.S. restrictions, Cheng claimed there were no issues and said the company used a mix of China and non-China cloud computing providers.
The U.S. under the Biden administration has ramped up limits on Chinese businesses’ access to advanced semiconductors used to power generative AI.
This is a comparison of Wednesday’s Federal Open Market Committee statement with the one issued after the Fed’s previous policymaking meeting in November.
Text removed from the November statement is in red with a horizontal line through the middle.
Text appearing for the first time in the new statement is in red and underlined.