Anthropic files for IPO; Wall Street mixed as oil prices rise, ASX set to slip
Stan Choe
Oil prices are rising after the latest fights that threaten the US-Iran ceasefire, but Wall Street isn’t too worried and US stocks are trading near records.
The S&P 500 rose 0.3 percent to its all-time high on Friday. In afternoon trading, the Dow Jones was down 108 points, or 0.2 percent, and the Nasdaq composite was up 0.5 percent. Both are off the record.
The Australian share market is poised for a decline, with futures at 4.57am (AEST) pointing to a decline of 15 points, or 0.2 per cent, at the open. The ASX closed flat on Monday. The Australian dollar traded lower at 71.63¢.
AI company Anthropic is heading towards going public on Wall Street, the latest phase of its rapid rise from a little-known research lab to one of the leading AI companies valued at US$965 billion ($1.4 trillion).
Anthropic said Monday it has filed a confidential filing with the U.S. Securities and Exchange Commission for its proposed initial public offering of shares.
“This gives us the option to go public once the SEC completes its review,” Anthropic said in a short statement. “The proposed initial public offering will depend on market conditions and other factors.”
The majority of US stocks fell, and some of the worst performers were companies with large fuel bills that were hurt by the rise in oil prices. United Airlines lost 2.4 percent and Alaska Air Group fell 2.6 percent after the price of Brent crude rose 5.2 percent to $95.86 a barrel. This means Brent has clawed back some of last week’s loss and is still well above its pre-war price of roughly US$70.
Expensive oil has already driven up inflation, which not only increases household bills but also increases bond yields. Recent high yields around the world have threatened to slow economies and drive down the prices of stocks and every other investment.
Among those hardest hit by higher interest rates are smaller companies, which have a harder time borrowing money to expand when loans become more expensive to repay. The Russell 2000 index of smallest U.S. stocks fell 0.4 percent, outperforming the rest of the market.
But hope appears to remain that the United States and Iran will eventually reach an agreement on reopening the Strait of Hormuz, allowing oil shipments from the Persian Gulf to resume and easing upward pressure on inflation.
Strength from the market heavyweights also helped keep the market stable.
Nvidia was the strongest force pushing the market higher, rising 5.3 percent after CEO Jensen Huang announced several product updates at a conference. What Nvidia is doing is hugely important for the US stock market because it’s the biggest in terms of overall market cap. This means stock movements carry more weight on the S&P 500 than others.
And Wall Street’s biggest companies are growing so much that they dominate the market. According to Stifel stock market strategist Thomas Carroll, the top 10 stocks control nearly half of the S&P 500’s total market capitalization; This is the highest level in the last 40 years.
It worked, as Big Tech stocks soared thanks to enthusiasm for artificial intelligence. However, Carroll warns that if the market’s lead expands, this could also put pressure on the index. Even if most stocks rally with such a rotation, stagnation or declines by Big Tech heavyweights could negatively impact S&P 500 index funds.
And one of the key indicators Carroll tracks about the breadth of the market is “a signal that a rotation is coming,” he wrote in a report.
Elsewhere on Wall Street, Science Applications International Corp. rose 16.9 percent after becoming the latest U.S. company to report higher profits than analysts expected in its latest quarter. SAIC also raised estimates for its future financial results after winning multiple contracts from the U.S. Department of Homeland Security, the military and other organizations.
A cavalcade of such profit reports helped the U.S. stock market reach records despite uncertainty created by the war with Iran.
Berkshire Hathaway fell 1.1 percent after announcing it would buy builder Taylor Morrison Home for $6.8 billion. This is one of the first major acquisitions the company has announced since Greg Abel took over leadership from famed investor Warren Buffett. Taylor Morrison Home rose 22.5 percent.
MGM Resorts International jumped 15.9 percent after Barry Diller’s business, People Inc., formerly known as IAC, offered to buy the rest of the company it doesn’t already own for $48.30 per share.
In the bond market, Treasury yields rose along with oil prices and rose after a report that growth in the U.S. manufacturing industry accelerated more than economists expected last month. The yield on the 10-year Treasury note rose to 4.48 percent from 4.45 percent at the end of Friday.
Higher yields have already pushed the average long-term U.S. mortgage interest rate to its most expensive level in nine months, which could reduce companies’ borrowing to build the AI data centers that have recently fueled the growth of the U.S. economy.
Indices in foreign stock markets fell in Europe after the strong closing in Asia.
Tokyo Nikkei 225 index reached its all-time high with an increase of 0.9 percent. SoftBank Group, an investment company focusing mainly on artificial intelligence, became Japan’s most valuable listed company, surpassing Toyota with an increase of 21.2 percent.
In South Korea, the Kospi index reached a record with an increase of 3.7 percent, after its largest company, Samsung Electronics, increased by 10.1 percent. Official data on Monday showed South Korea’s exports rose 53 percent in May from a year earlier, driven by global demand for semiconductors.
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