Several major gauges of fear in the market are reflecting increased alarm from investors. The Cboe Volatility Index , a measure of anticipated market instability that’s known as Wall Street’s “fear gauge,” topped 19 on Monday and closed at its highest level since October. It neared the key level of 20 in late fall of 2023 and at other times during the pandemic when traders were wary of an equity correction. @VX.1 1Y mountain The VIX over the past year At the same time, CNN’s Fear and Greed Index has tipped into “fear” territory this week. The market mood tracker sat in the “neutral” zone one week prior, but was comfortably in the “greed” range both a month and year prior. The index, which compiles seven different measures including put-and-call options and junk bond demand, has five labels ranging from “extreme greed” to “extreme fear.” When it tips below an average score of 50 like it has in recent days, it can be taken as a sign of investors growing nervous. And the so-called Panic Index from Goldman Sachs’ trading desk has climbed to levels not seen since early 2023. Before that, it last touched this point during 2022’s market sell-off. Taken together, these data points underscore mounting skittishness among market participants. This comes amid a breather following the market’s rally, while concerns rise around the potential for interest rates to remain higher for longer and for escalation in the conflict gripping the Middle East. The market has been thrown “this fear fly into the ointment,” said Alex McGrath, chief investment officer at NorthEnd Private Wealth, citing the situation in the Middle East on top of stretched market valuations and the path of interest rates. “You’ve got so much in the air right now.” Monetary policy has been top of mind for more than a year as investors have wondered when, or if, the Federal Reserve would begin lowering interest rates following a historic tightening campaign. Fed funds futures traders are pricing in the first rate cut coming in September, according to the CME FedWatch tool . That’s much later than market participants anticipated heading into the year. Those hoping for rate decreases sooner rather than later were dealt a tough blow when closely followed economic data was released last week. On an annualized basis, price indexes tied to both consumers and wholesalers showed inflation remained above the Fed’s preferred 2% clip, raising concerns that the cost of borrowing could stay elevated for longer than previously expected. That has contributed to a recent market drop, as the major indexes have pulled back in April from record highs notched earlier this year. Month to date, the S & P 500 is tracking for a decline of more than 3%, while the Nasdaq Composite is off by nearly 3%. The Dow is poised to slide almost 5% during the period. .DJI .SPX,.IXIC YTD mountain The three major indexes in 2024 This latest decline has placed the Dow just shy of its 2024 flatline, a stunning reversal after trading near the key 40,000 level just weeks prior. Treasury yields have also taken a leg up, with the rate on the 10-year note topping 4.6%. Rising oil prices have also weighed on the stock market, as commodity traders bought in on expectations of escalating conflict in the Middle East. Iran launched hundreds of drones and missiles at Israel on Saturday, though the attack was largely thwarted by the latter’s defense system. Now, traders are watching for Israel’s response. The current market downturn shouldn’t yet be taken as anything other than a typical — and healthy — correction, said Jason Heller, Coastal Wealth executive vice president. But he said the key threat to this outlook is if the conflict in the Middle East further spirals. “Very rarely do you get an escalator ride upward in the market — it tends to be an elevator ride,” Heller said. But, “I always write in pencil when I’m giving you prognostications, because things can change.” “This is just the natural ebb and flow, I think, of market pricing,” he added. “But, the caveat is, if things really go sideways in the Middle East, that could change the calculus.”
Ted Pick, CEO Morgan Stanley, speaking on CNBC’s Squawk Box at the World Economic Forum Annual Meeting in Davos, Switzerland on Jan. 18th, 2024.
Adam Galici | CNBC
Morgan Stanley topped analysts’ estimates for third quarter profit as its wealth management, trading and investment banking operations generated more revenue than expected.
Here’s what the company reported:
Earnings:$1.88 a share vs $1.58 LSEG estimate
Revenue: $15.38 billion vs. $14.41 billion estimate
Morgan Stanley had several tailwinds in its favor. The bank’s massive wealth management business was helped by high stock market values in the quarter, which inflates the management fees the bank collects.
Investment banking has rebounded after a dismal 2023, a trend that may continue as easing rates will encourage more financing and merger activity.
Finally, its Wall Street rivals have posted better-than-expected trading results, making it unlikely that the firm missed out on elevated activity.
Chinese e-commerce company Alibaba has invested heavily in its fast-growing international business as growth slows for its China-focused Taobao and Tmall business.
Nurphoto | Nurphoto | Getty Images
BEIJING — Chinese e-commerce giant Alibaba‘s international arm on Wednesday launched an updated version of its artificial intelligence-powered translation tool that, it says, is better than products offered by Google, DeepL and ChatGPT.
Alibaba’s fast-growing international unit released the AI translation product as an update to one unveiled about a year ago, which it says already has 500,000 merchant users. Sellers based in one country can use the translation tool to create product pages in the language of the target market.
The new version is based only on large language models, allowing it to draw on contextual clues such as culture or industry-specific terms, Kaifu Zhang, vice president of Alibaba International Digital Commerce Group and head of the business’ artificial intelligence initiative, told CNBC in an interview Tuesday.
“The idea is that we want this AI tool to help the bottom line of the merchants, because if the merchants are doing well, the platform will be doing well,” he said.
Large language models power artificial intelligence applications such as OpenAI’s ChatGPT, which can also translate text. The models, trained on massive amounts of data, can generate humanlike responses to user prompts.
Alibaba’s translation tool is based on its own model called Qwen. The product supports 15 languages: Arabic, Chinese, Dutch, English, French, German, Italian, Japanese, Korean, Polish, Portuguese, Russian, Spanish, Turkish and Ukrainian.
Zhang said he expects “substantial demand” for the tool from Europe and the Americas. He also expects emerging markets to be a significant area of use.
When users of Alibaba.com — a site for suppliers to sell to businesses — are categorized by country, developing countries account for about half of the top 20 active AI tool users, Zhang said.
Chinese companies have increasingly looked abroad for growth opportunities, especially e-commerce merchants. PDD Holdings‘ Temu, fast fashion seller Shein and ByteDance’s TikTok are among the recent global market entrants. Many China-based merchants also sell on Amazon.com.
Zhang declined to share how much the updated version would cost. He said it was included in some service bundles for merchants wanting simple exposure to overseas users.
His thinking is that contextual translation makes it much more likely that consumers decide to buy. He shared an example in which a colloquial Chinese description for a slipper would have turned off English-speaking consumers if it was only translated literally, without getting at the implied meaning.
“The updated translation engine is going to make Double 11 a better experience for consumers because of more authentic expression,” Zhang said, in reference to the Alibaba-led shopping festival that centers on Nov. 11 each year.
Alibaba’s international business includes platforms such as AliExpress and Lazada, which primarily targets Southeast Asia. The international unit reported sales growth of 32% to $4.03 billion in the quarter ended June from a year ago.
That’s in contrast to a 1% year-on-year drop in sales to $15.6 billion for Alibaba’s main Taobao and Tmall e-commerce business, which has focused on China.
Nomura analysts expect that Alibaba’s international revenue slowed slightly to 29% year-on-year growth in the quarter ended September, while operating losses narrowed, according to an Oct. 10 report. Alibaba has yet to announce when it will release quarterly earnings.
Check out the companies making headlines in midday trading: UnitedHealth — Shares plunged 7.2% after the health-care giant lowered its earnings guidance due to ongoing headwinds from a cyberattack earlier in the year. UnitedHealth cut the top end of its full-year earnings forecast, which is now $27.50 to $27.75 per share, compared to previous guidance of $27.50 to $28.00 per share. UnitedHealth still reported a top- and bottom-line beat in the third quarter. Walgreens Boots Alliance — The stock soared 11.9% following the drugstore chain’s fiscal fourth-quarter earnings and revenue beat. Walgreens also plans to close about 1,200 stores over the next three years, which will be “immediately accretive” to its adjusted earnings and cash flow, the company said. ASML — Shares dropped more than 16% after the Dutch semiconductor equipment maker released its earnings report early and offered a weaker-than-expected sales outlook for 2025. The company’s CEO also warned of a “more gradual” recovery ahead. Other chip stocks fell as well, with Nvidia , Advanced Micro Devices and Broadcom last down at least 4% each. Wolfspeed — Shares popped 23% on news that the North Carolina-based chipmaker will obtain up to $750 million in U.S. government grants for its new factories in North Carolina and New York. A group of investors including Apollo and Baupost will provide an additional $750 million in funding for its more than $6 billion plan. Bank of America — The lender saw shares gain 2% after it exceeded analysts’ estimates for third-quarter profit and revenue on better-than-expected trading results. Net interest income, one of the key ways that banks make money, fell 2.9% to $14.1 billion, edging out the $14.06 billion StreetAccount estimate. Enphase Energy — Shares slid 6.8% on the back of a downgrade to sector perform from outperform by RBC Capital Markets. The firm said Enphase should grow at a slower rate than the consensus forecast pencils in. Johnson & Johnson — The health-care conglomerate gained 1.6% after posting quarterly results that exceeded expectations on the back of strong sales of oncology drugs. Johnson & Johnson reported adjusted earnings per share of $2.42 and $22.47 billion in revenue. Meanwhile, analysts surveyed by LSEG had forecast $2.21 in earnings per share on $22.16 billion in revenue. The firm also raised guidance for its 2024 profit and sales. Energy stocks — Energy stocks declined as oil prices dropped about 5% , with the sector last down more than 2%. APA was the biggest laggard, tumbling 6%. Diamondback Energy tanked 4.3%, while Occidental Petroleum , Valero Energy and Halliburton lost more than 3% each. Coty — The CoverGirl parent plunged 11% after trimming its fiscal first-quarter guidance and warning of slower growth trends in the U.S. Citigroup — Shares lost about 4% despite stronger-than-expected third-quarter earnings . The bank posted earnings per share of $1.51 on $20.32 billion in revenue. Analysts polled by LSEG had anticipated earnings of $1.31 per share on revenue of $19.48 billion. Charles Schwab — Shares of the brokerage company rallied more than 8% as third-quarter results topped analysts’ expectations. The company posted earnings of 77 cents, excluding one-time items, on $4.85 billion in revenue. PNC Financial — The Pittsburgh-based regional bank rose more than 3% on a better-than-expected earnings report. Earnings came in at $3.49, topping an LSEG estimate of $3.30 per share. The company reported $5.43 billion in revenue, topping a forecast of $5.39 billion. Boeing — Shares added about 2.1% after the aircraft manufacturer said it could raise up to $25 billion in debt and shares to increase liquidity. — CNBC’s Yun Li, Alex Harring, Hakyung Kim, Michelle Fox, Pia Singh, Sarah Min contributed reporting.