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US stocks rose on Wednesday, eyeing a return to their record-setting run as Alibaba’s (BABA) spending plans lifted hopes for a continuation of the AI-fueled tech rally.
The tech-heavy Nasdaq Composite (^IXIC) and the Dow Jones Industrial Average (^DJI) moved up nearly 0.3%, while the S&P 500 (^GSPC) nudged around 0.2% higher.
Tech stocks are shaping up for a slight comeback, after the major gauges snapped a win streak on Tuesday amid losses for “Magnificent Seven” megacaps.
Alibaba stock jumped over 8% in early trading as investors welcomed the Chinese tech giant’s pledge to hike its AI spending beyond its original $50 billion target. The boost is needed for Alibaba to keep pace as global investment in AI surges to $4 trillion, its CEO said. At the same time, Micron’s stronger-than-expected quarterly earnings delivered another positive signal for the AI trade, though shares in the memory chipmaker — which supplies semiconductors for Nvidia’s (NVDA) AI systems — fell Wednesday.
Debate over the prospects for US interest-rate cuts — the big focus for markets right now — appeared to keep a lid on gains. Comments from Federal Reserve officials this week have hinted at growing disagreement on what the path of policy should be, given the cracks showing in the labor market.
Fed Chair Jerome Powell reiterated in a speech on Tuesday that the central bank would proceed cautiously on further rate cuts, even as he left the door open to more easing. He also described stocks as “fairly highly valued.”
Wall Street is now counting down to the release of the Fed’s preferred inflation gauge, the Personal Consumption Expenditures index, on Friday. Markets are watching for reassurance that inflation isn’t posing a threat to high expectations for two more rate cuts this year.
Before that, updates on weekly mortgage applications and August home sales on Wednesday will provide a window into the housing market and the US economy more broadly.
LIVE 16 updates
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Micron stock falls after earnings beat
Micron (MU) stock fell over 2% early Wednesday despite its quarterly earnings results surpassing Wall Street’s expectations.
The memory chipmaker, which supplies its HBM (high bandwidth memory) chips to Nvidia (NVDA) for the tech giant’s AI systems, reported fourth quarter revenue and earnings and first quarter guidance above Wall Street analysts’ projections Tuesday after the bell.
The beat was seen as a positive signal for the AI trade as Micron’s CEO said he expects “trillions of dollars to be invested in AI” in the coming years. Analysts across Wall Street lifted their price targets on the stock following the results.
But Hedgeye Risk Management analysts, who hold a short position on Micron, noted that its HBM revenue for the quarter (the three months ending Aug. 28) was below expectations, coming in at “nearly $2 billion” versus the $2 billion projected.
Micron has risen to prominence as one of two suppliers of HBM to Nvidia’s AI systems amid a wave of investment in AI data centers, alongside Korea-based rival SK Hynix (000660.KS).
The world’s other major memory chipmaker, Samsung (005930.KS), has fallen behind, but the Korean tech giant recently qualified to supply its HBM3E memory chips to Nvidia, adding competition for Micron.
“Our Short thesis is predicated on MU losing material market share to Samsung next year on HBM,” Hedgeye Risk Management analysts wrote in a note on Wednesday.
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Stocks rise at the open as Alibaba lifts AI hopes
US stocks rose at the open on Wednesday as Alibaba’s (BABA) plans to hike its artificial intelligence spending lifted hopes for a continuation of the AI-fueled tech rally.
The tech-heavy Nasdaq Composite (^IXIC) and the Dow Jones Industrial Average (^DJI) moved up nearly 0.3%, while the S&P 500 (^GSPC) nudged around 0.2% higher.
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Alibaba stock pops, lifting Chinese chipmaker stocks
Chinese tech and chipmaker stocks got a lift on Wednesday following an 8% rise in Alibaba (BABA) stock after the company announced its growing AI spending ambitions.
Shares of SMIC (0981.HK), China’s largest semiconductor foundry, rose 5% while Hua Hong (1347.HK) added nearly 4% in Hong Kong. In Shanghai, shares of Cambricon (688256.SS), a challenged to Nvidia (NVDA), gained 1.7%.
The moves came after Alibaba revealed plans to spend more than $50 billion on artificial intelligence in order to keep up with the pace of investment from other large tech leaders.
Also helping the stock were increased bets from Cathie Wood’s Ark Invest. The firm reopened two positions in Alibaba stock and also invested in other Chinese stocks, including Baidu (BIDU) and Pony AI (PONY).
Baidu stock climbed 3%, while Pony AI stock advanced 2%.
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Lithium Americas stock soars as Trump administration explores equity stake
Lithium Americas (LAC) stock jumped about 70% higher ahead of the opening bell on Wednesday after Reuters reported that the Trump administration is seeking an equity stake of as much as 10% in the company.
The Trump administration is intervening in the company as a way of renegotiating a $2.26 billion Department of Energy loan granted under the Biden administration for the Thacker Pass lithium project. Trump has also pushed for the US to take stakes in Intel (INTC), MP Materials (MP), and other companies seen as critical to national security.
The Thacker Pass mining project, which Lithium Americas is undertaking with General Motors (GM), is slated to become the Western Hemisphere’s largest source of lithium when it opens in 2028, per Reuters, as well as a key project in bolstering the US’s lithium supply chain.
Lithium Americas confirmed that it’s in discussions with the Energy Department and GM regarding the Thacker Pass project and said “the company continues to work with the DOE and GM regarding proposals for a mutually agreeable resolution.”
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European defense stocks rise after Trump switches position on Russia, Ukraine
European defense stocks rose on Wednesday after President Trump reversed his position on the Russia-Ukraine war, saying that Ukraine could regain all its territory and calling Russia a “paper tiger.”
Germany’s Rheinmetall (RHM.DE) rose 2%, while the country’s Hensoldt (HAG.DE) and Sweden’s SAAB (SAAB-B.ST) added over 4% on an overall down day for the major European indexes. UK’s BAE Systems (BA.L) gained about 1%.
“I think Ukraine, with the support of the European Union, is in a position to fight and WIN all of Ukraine back in its original form,” Trump said on Truth Social on Tuesday afternoon. “With time, patience, and the financial support of Europe and, in particular, NATO, the original Borders from where this War started, is very much an option.”
Earlier on Tuesday, Trump told reporters that NATO countries should shoot down Russian military aircraft in their airspace, though he said it “depends on the circumstance” if the US would back up its allies.
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The Fed’s unity is already fraying
Last week, the Fed voted to cut interest rates in a decision that expressed unity despite a sole dissent. But a mere week later, commentary from central bankers is foreshadowing disagreement to come, noted Yahoo Finance’s Hamza Shaban.
He reports in today’s takeaway from Morning Brief:
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Good morning. Here’s what’s happening today.
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Premarket trending tickers: Lithium Americas, GM and Micron
Here’s a look at some of the top stocks trending in premarket trading:
Lithium Americas (LAC) stock soared 64% in premarket trading on Wednesday after the Trump administration said it is seeking an equity stake of as much as 10% in the company.
General Motors (GM) stock rose 3% before the bell on Wednesday after Citi increased its price target for the stock to $75 from $61.
Micron (MU) stock fell 1% in premarket trading on Wednesday following the release of its fourth quarter earnings report the day prior.
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Important point from Micron on its earnings call
Micron Technology (MU) did its part this week to contribute to the AI bullishness.
Here’s what the memory chipmaker’s execs said on an earnings call last night, when asked about the demand outlook:
Couple this with the $100 billion Nvidia (NVDA) and OpenAI (OPAI.PVT) deal this week, and Alibaba (BABA) saying today it would spend more than $50 billion over three years on AI models, and it’s hard to play the bear hand on AI names right now.
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Time to read up on a government shutdown (again)
It has been a hot minute since markets had to worry about a government shutdown.
We have been here before, and a shutdown is usually averted last minute. That’s why the market tends to take the ordeal in stride until it absolutely can’t.
Helpful context on the latest brewing debacle from Deutsche Bank strategist Jim Reid:
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It has been a September for investors
A lot has been thrown at the market so far in September — a month that seasonally isn’t often great from a historical perspective.
But here we are, getting bullish AI comments from Alibaba (BABA) and Nvidia (NVDA) this week, and a rate cut last week.
Good point this morning from the host of the Yahoo Finance Trader Talk podcast, Kenny Polcari:
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Eyes on: General Motors
Two bullish calls this week on General Motors (GM) is enough to get my attention!
UBS this morning upgraded GM to Buy, saying it sees a better-than-expected margin outlook. I heard the same thing from Citi’s Michael Ward in an upbeat note on Monday. Tariffs are still a risk to GM, but the automaker appears to have managed the situation well, from a margin standpoint.
Some of Ward’s thinking from his segment on Yahoo Finance on Monday is below. Keep an eye on Ford (F) here as well. I am headed to Detroit early next week for a CEO conference the company is holding, and could get commentary on near-term demand trends and the near-term margin outlook.
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Big Tech’s AI ambitions are straining the US power grid. Natural gas might be its answer.
The world’s biggest energy companies are planning for a potential natural gas boom, given the heavy power demand predicted to come from growth in AI infrastructure.
Yahoo Finance’s Jake Conley reports:
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Alibaba hikes AI budget above $50 billion, stock surges
Alibaba (BABA, 9988.HK) shares surged after its CEO revealed the Chinese tech giant plans to ramp up AI spending past an original $50 billion-plus target.
The stock jumped around 9% in US premarket as Eddie Wu joined the ranks of tech leaders pledging ever-greater investment to compete in AI.
Bloomberg reports:
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Markets across Asia dip in line with end to Wall Streets record-setting rally
Asian markets saw losses overnight as the region reacted to Wall Street’s pause in a three-week rally.
AP Finance reports:
Japan’s benchmark Nikkei 225 (^N225) lost 0.4% in morning trading to 45,300.30. Australia’s S&P/ASX 200 (^AXJO) slipped 1.0% to 8,756.30. South Korea’s Kospi (^KS11) dropped 1.1% to 3,448.44. Hong Kong’s Hang Seng (^HSI) rose 0.6% to 26,305.02, while the Shanghai Composite gained 0.2% to 3,829.91.
U.S. stocks took a pause from their relentless rally, with the S&P 500 dipping 0.6%, the Dow Jones Industrial Average falling 88 points, or 0.2%, and the Nasdaq composite sinking 0.9%.
It’s the first pullback for the indexes after the trio set all-time highs in each of the last three days.
Read more here.
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Oil prices rise following reports of US stockpiles depleting
Reuters reports:
