It was a busy week of business news in the US, which included a record bond offering, an Apple Inc product launch and even some substantial tinkering with the hallowed Dow Jones Industrial Average.
However, US markets were most influenced by what did not happen: a US military strike against Syria.
Markets had been shadowed in recent weeks by fear of a Washington-led attack on Syria, but US stocks rallied this week as Western leaders back-burnered plans for a strike in response to a Russian proposal to put Syria’s chemical weapons under international control.
The Dow Jones Industrial Average jumped 453.56 (3.04 percent) to 15,376.06, its strongest rally since January, while the broad-based S&P 500 tacked on 32.82 (1.98 percent) at 1,687.99 and the tech-rich NASDAQ Composite Index rose 62.17 (1.70 percent) to 3,722.18.
Markets eagerly awaited the US Federal Reserve’s two-day policy meeting starting on Tuesday. The Federal Open Market Committee is widely expected to announce the first reduction in the Fed’s US$85 billion-a-month bond-buying program.
Perhaps the week’s biggest highlight was Verizon Communications Inc’s successful US$49 billion bond sale, which smashed the US$17 billion all-time record set by Apple in April. The funds will help finance Verizon’s US$130 billion purchase of Vodafone Group PLC’s stake in their Verizon Wireless joint venture.
Underwriters for the massive deal doubled the size from initial plans in response to heavy demand. Investors ate up the relatively generous coupon, which included a 5.185 percent yield on 10-year bonds.
Dell Inc shareholders finally endorsed a proposal to go private after activist Carl Icahn ended his challenge to founder Michael Dell’s leveraged buyout. Dell will now attempt to boost its service and software businesses to make up for a declining personal computer business.
Twitter Inc announced in a tweet that it has submitted papers for the most hotly anticipated initial stock offering (IPO) in the tech sector since Facebook Inc’s IPO last year.
Dow index owner S&P Dow Jones Indices said that it is replacing three stocks in the 30-company index with stocks that had higher value or provided more market diversity. The dropped companies — Bank of America Corp, Hewlett-Packard Co and Alcoa Inc — will be replaced by Goldman Sachs, Visa Inc and Nike Inc on Sept. 23.
The buzz generated by Verizon and others helped offset Apple’s disappointing launch of two iPhone models. Analysts faulted the lower-priced iPhone 5C as still too costlyfor emerging markets and were disappointed at the lack of a long-awaited deal with China Mobile Ltd (中國移動). Apple shares shed more than 8 percent after the Tuesday launch to close the week at US$464.90.
The week ahead features reports on industrial production (tomorrow), housing starts (Wednesday) and existing-home sales (Thursday).
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to