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Futures search for direction, OpenAI's reported revenue - what's moving markets

Published 2024-02-09, 05:19 a/m
Updated 2024-02-09, 05:22 a/m
© Reuters. -- U.S. stock futures seek direction heading into the final trading day of the week. The S&P 500 briefly touches the 5,000-point mark in intraday trading during the prior session following a bevy of mostly strong corporate earnings. Meanwhile, artificial intelligence-darling OpenAI's annualized revenues reportedly surpass $2 billion as demand booms for the ChatGPT-maker's products.

1. Futures search for direction

U.S. stock futures sought direction on Friday, as investors assessed a busy week of quarterly corporate results.

By 04:56 ET (09:56 GMT), the S&P 500 futures contract was widely unchanged, Nasdaq 100 futures had gained 31 points or 0.2%, and Dow futures had slipped by 19 points or 0.1%.

On Thursday, the three main averages closed in the green. The benchmark S&P 500 ended up by 0.1% after momentarily breaching the 5,000-point milestone, while the tech-heavy Nasdaq Composite advanced by 0.2% and the blue-chip Dow Jones Industrial Average rose by 0.1%. All three of the indices are on pace to post their fifth-consecutive weekly gain.

In individual stocks, Walt Disney (NYSE:DIS) shares jumped after the media and entertainment behemoth delivered better-than-expected first-quarter profit. Arm (NASDAQ:ARM) also surged by almost 48% following an upbeat artificial intelligence-driven forecast from the British chip designer.

Elsewhere, U.S. weekly jobless claims dropped by slightly more than expected, in a sign of continued labor market strength that could support growth momentum in the world's largest economy. However, sentiment was dampened by rapidly fading bets of an imminent interest rate reduction by the Federal Reserve, as well as emerging uncertainty around the stability of some regional banks.

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2. Take-Two slashes full-year estimates; Cloudflare's rosy guidance

Take-Two Interactive (NASDAQ:TTWO) has cut its annual bookings guidance, citing soft anticipated demand for titles like "NBA 2K24" and a planned release moving out of its fiscal fourth quarter.

The video game publisher cut its forecast for net bookings to a range of $5.25 billion to $5.3 billion, down from $5.45B to $5.55B, adding that it is also experiencing weakness in key mobile advertising revenues. Shares in Take-Two, which recently disappointed analysts after it announced that the latest installment of its best-selling franchise "Grand Theft Auto" would not be released until 2025, slid sharply in premarket U.S. trading on Friday.

Cloudflare (NYSE:NET) shares spiked prior to the opening bell after the internet firm unveiled first-quarter income and revenue guidance that topped Wall Street expectations.

The California-based group forecast current-quarter adjusted per-share earnings of $0.13 on revenue of $372.5M-$373.5 million, above projections of $0.12 and $372.3M (NYSE:MMM), respectively. Cloudflare's fourth-quarter profit beat estimates as well, as the company benefited from a surge in demand for its cloud and content delivery services.

On Friday's earnings calendar, beverage and food business Pepsi is slated to report.

3. OpenAI revenues soar above $2 billion - Financial Times

OpenAI, a major focal point of soaring interest in artificial intelligence, has seen its revenues crest over $2 billion on an annualized basis, according to sources quoted by the Financial Times.

The Microsoft-backed start-up's yearly run rate, a gauge of financial performance that multiplies its prior month revenue by 12, touched the $2B mark last month, the FT reported.

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Sources familiar with the company's finances told the paper that it can more than double this figure in 2025, potentially making it one of the fastest-growing ventures in Silicon Valley history. Previously, tech publication The Information said that OpenAI's annualized revenue touched $1.3B last October, indicating that demand for its generative AI tools -- most notably its popular chatbot ChatGPT -- is rising.

OpenAI's success comes despite a much publicized leadership shake-up in November that resulted in the ouster and subsequent re-instatement of Chief Executive Sam Altman. Altman, who has become a public face of an AI boom that has sparked a tech industry arms race and helped fuel a stock market rally in 2023, has stated that more than 90% of Fortune 500 companies are using OpenAI products.

4. Nissan shares sink following China sales decline

Japan-listed shares in Nissan (TYO:7201) tumbled on Friday after the car manufacturer slashed its full-year sales volume forecast due to slumping demand in China.

Although Nissan reiterated its annual operating profit outlook of 620 billion yen thanks in part to "updated foreign exchange assumptions" related to a weaker yen, it lowered its sales guidance to 3.55 million vehicles from 3.7 million.

The decision was driven by a 26% drop in nine-month retail sales volume in China, the world's largest auto market. Chief Financial Officer Stephen Ma told reporters that "along with what's happening" in the country, the revised sales volume guidance reflects "challenges including intensifying competition and logistics issues around our key markets."

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In its quarter ended on Dec. 31, Nissan's net income of 29.1 billion yen missed Bloomberg consensus estimates of 77.7 billion yen.

5. Oil prices on track for weekly gains

Oil prices were on pace to end the week higher on Friday, as ongoing violence in the Middle East showed little signs of abating after Israel rejected a ceasefire offer from Hamas.

At 09:56 ET, the Brent oil futures expiring in April were broadly flat at $81.65 a barrel, while West Texas Intermediate crude futures climbed 0.2% to $76.36 per barrel.

Israeli forces carried out an attack on on the southern border city of Rafah on Thursday following a decision by Prime Minister Benjamin Netanyahu to refuse to bring hostilities to a halt. Crude prices rose in the prior session, and are now on track to increase by 6% this week.

"There had been suggestions, or at least hope, that we could see a ceasefire, which could have helped to de-escalate the situation. But clearly, the concern now is we see further escalation," analysts at ING said in a note.

The Israel-Hamas conflict and its implications on broader tensions throughout the Middle East have cast doubt over supplies out of the crucial region, placing upward pressure on oil prices.

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