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AT&T sees major outages as cyberattack investigated. (0:17) Is Nvidia the Fed’s biggest enemy? (2:28) Google pauses AI image generation over race concerns. (6:18)
The following is an abridged transcript:
AT&T (NYSE:T), Verizon (VZ) and T-Mobile (TMUS) are being left behind by the big broader market stock rally as a large-scale cellular outage hit the U.S.
More than 60,000 incidents were recorded by AT&T subscribers, according to Downdetector, which tracks outages of major services. Verizon saw more than 3,500 outages, while T-Mobile also experienced disruptions, but both said their networks were operating normally.
The cause was unclear. The U.S. Cybersecurity and Infrastructure Security Agency said it is working “closely” with AT&T on the cause of the outage.
Sources briefed on the situation told ABC News that the FBI and Department of Homeland Security are “urgently investigating” to determine whether a cyberattack or hack was responsible or if it was a technical malfunction.
The outage, which started around 4 a.m. ET, also impacted emergency services, including AT&T’s FirstNet, which is used by first responders.
By late morning, AT&T said 3/4 of its network has been restored.
In today’s trading
The bulls are off to the races after Nvidia (NVDA) came through with a fourth -quarter numbers and strong guidance. Tech stocks were naturally the biggest beneficiaries.
The Nasdaq (COMP.IND) is up +2.5%, while the S&P (SP500) is up +1.75%. The Info Tech sector (XLK) is up +3%, while Communications Services (XLC) and Consumer Discretionary (XLY) – the other megacap homes – are up +1.5%.
The strength is coming in the face of rates, which continue to rise today. The 10-year Treasury yield (US10Y) is above 4.30% and the market is now pricing in fewer than four quarter-point Fed rate cuts this year after a surprise drop in weekly jobless claims.
Claims for the week ended February 17 dropped 12,000 to 201,000, lower than the 217,000 consensus and upwardly revised 213,000 in the prior week. -Continuing claims fell to 1.862 million from a downwardly-revised 1.889 million, also well below the consensus of 1.884 million.
Pantheon Macro economist Oliver Allen noted “the four-week average also edged down, breaking the upward trend of the past month or so. The big picture remains that both initial and continuing claims are remarkably low given the stage in the economic cycle.”
J.P. Morgan global strategist Marko Kolanovic says stock rallies like today and what we’ve seen the past year could be a problem for the Fed as it tries to get services and shelter inflation down.
“Historically, loose monetary conditions are a significant driver of upside in CPI readings,” Kolanovic said.
“With the Nasdaq index rallying ~70% in a year, tight labor markets, and high immigration and government fiscal spending, it wouldn’t be a surprise that inflation may stop declining or move higher.”
He asks: “Can one get inflation under control with stock and crypto markets adding trillions of paper wealth, and tightening aspects of QT neutralized by treasury issuance? For instance, just one tech company’s recent gains added the equivalent of the market capitalization of the bottom 100 companies in the S&P 500, and the size of the crypto market doubled since last fall.”
“Can the Fed lower inflation with these developments that are loosening monetary conditions?”
In other economic data this morning
February the flash S&P Global U.S. Composite PMI slipped to 51.4 from 52.0 in January, indicating that business activity expanded at a slower clip.
The slower output appears to stem from a softer increase in services business activity. Meanwhile, manufacturing experienced a renewed increase in production, with an improvement in supply chains following January’s adverse weather.
U.S. Existing Home Sales advanced 3.1% in January to 4 million, surpassing the 3.96 million consensus and up from 3.88 million in December (revised from 3.78 million).
Wells Fargo economists say: “While certainly a good start to the year, headwinds for would-be homebuyers persist. Inventory on the market climbed 2% to about 1 million homes last month, though inventory remains relatively limited. With homebuyers taking advantage of lower mortgage rates, low levels of inventory have kept upward pressure on prices.”
Among active stocks
B. Riley (RILY) jumped 25% after the company said an internal review by its board’s audit committee determined the company acted properly in regard to the management-led buyout of Franchise Group.
The review also confirmed that the company and its executives, including CEO Bryant Riley, had no involvement with or any knowledge of any of the alleged misconduct concerning Prophecy Asset Management. The internal review was led by outside counsel at Sullivan & Cromwell.
Lucid Group (LCID) slumped after the company posted a wider loss from a year ago on a 39% decline in revenue. The EV maker generated $157.2 million in revenue off customer deliveries of 1,734 vehicles. This compares to $257.7 million in sales for the same quarter last year and is below the consensus estimate of $181.8 million.
And Etsy (ETSY) was under pressure. The company said consolidated gross merchandise sales were down 0.7% year over year to $3.6 billion vs. $3.97 billion consensus.
Looking ahead, Etsy said GMS for the first quarter of 2024 is currently estimated to decline in the low-single-digit range on a year-over-year basis. The retailer’s guidance was noted to reflect s slow start to the quarter, and the current expectation is that GMS for the core Etsy marketplace improves through the rest of the quarter as a result of planned product and marketing investments. If trends fail to improve as anticipated, the GMS slowdown could become a mid-single-digit decline.
In other news of note
Super Micro Computer (SMCI) announced a proposed convertible senior notes offering of up to $1.5 billion. SMCI has recently been in the headlines due to the stunning rally that its stock mounted.
Since reporting preliminary FQ2 2024 results last month, investors sent the stock on a breathtaking run that saw it climb a whopping 223.1% and peak at an all-time high last week. The company said it intends to offer $1.5 billion aggregate principal amount of convertible senior notes due 2029.
And Alphabet’s Google (GOOG) (GOOGL) is pausing image generation of people from its artificial intelligence model Gemini, following criticism about how it was handling race. Google said in a post on X that it was aware that Gemini is offering inaccuracies in some historical image generation depictions.
The company said: “We’re already working to address recent issues with Gemini’s image generation feature. While we do this, we’re going to pause the image generation of people and will re-release an improved version soon.”
And in the Wall Street Research Corner
Jefferies highlighted 14 Buy-rated stocks that have seen big improvements in their return on equity and have strong momentum. Analysts gathered small- and mid-cap names that ranked well in their balance sheets.
Among the stocks popped up on the screen are Electronic Arts (EA), Ollie’s Bargain (LLI), Dave & Buster’s (PLAY) and Eagle Materials (EXP).
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