What’s News in Markets: IBM’s Warning, Apple’s Comeback, Wall Street Cashes In

SPEAKER_1 (0:00)

Fusion powers the sun and stars. General Fusion is working to bring the zero carbon abundant energy source to earth. As global electricity demand surges, Fusion has the potential to deliver clean, scalable power for a growing world. Proudly NASDAQ listed, General Fusion is the first publicly traded pure play fusion energy company in the world. With its magnetized target fusion technology and operational demonstration machine, General Fusion is advancing toward commercialization, targeting a first of a kind fusion plant around 2035

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Imani Moise (0:33)

Hey, listeners. It's Saturday, July 18th. I'm Imani Moise for The Wall Street Journal. And this is What's News in Markets, our look at the biggest stock moves of the week and the news that drove them. Let's dive in. US stocks fell this week as investors weighed strong earnings and a better than expected inflation report against rising oil prices. June's consumer price index came in below economist estimates, easing fears of an immediate interest rate hike. But renewed fighting in the Middle East pushed oil prices higher, raising concerns about where inflation goes from here. Chip stocks also slumped during another volatile week for the AI trade. Overall, the NASDAQ led the losses, falling 2.9 percent. The S&P 500 declined 1.6 percent, and the Dow ended the week 0.9 percent lower.

The worst performing stock in the Dow this week was IBM. Shares in the blue chip technology giant plunged 26 percent after the company issued a rare profit warning, triggering the biggest one-day drop in its 115-year history. IBM has spent years positioning itself as a company that helps its customers adapt to the AI era. But this week, the company admitted it was caught flat-footed, and its software and infrastructure businesses fell short of expectations because it didn't react quickly enough to changing market conditions. Analysts say many corporate customers are redirecting technology budgets toward AI infrastructure, like servers and memory chips, leaving less money for some of the software and systems IBM sells. Investors are now reassessing whether one of America's oldest technology companies can still compete in an industry that's being reshaped by AI.

It's a familiar question for IBM. The company that helped send people to the moon, worked on America's social security system, and built a supercomputer that beat humans at jeopardy has reinvented itself repeatedly over the last century.

Apple briefly reclaimed its title as America's most valuable publicly traded company this week, overtaking AI chip giant, NVIDIA. Apple's market cap hit 4.91 trillion during Friday morning trading, momentarily surpassing NVIDIA before the tech giant switched places again midday.

The iPhone maker ended the week with a market value of roughly $4.902 trillion, just behind NVIDIA's 4.908 trillion. The swap represents a shift in how Wall Street is thinking about the AI trade. Wall Street appears increasingly confident that Apple can use AI to strengthen its existing ecosystem of iPhone users, even if it was late to the AI race. Apple shares finished the week nearly 6% higher. Meanwhile, chip stocks were punished this week, even after Taiwan's semiconductor manufacturing company reported another quarter of record earnings. Shares in TSMC dropped 5%, while NVIDIA stocks slipped 3.9%, and the Philadelphia Semiconductor Index fell almost 10% after months of explosive gains. Some investors are simply locking in profits, and others are starting to question how much longer the AI infrastructure boom can keep growing at this blistering pace.

And finance was one of the best-performing sectors, as Wall Street's record run kept traders, dealmakers, and bankers busy. The S&P Financial Index rose about 1% after the nation's biggest banks reported blockbuster earnings. JPMorgan Chase, Goldman Sachs, Bank of America, Citigroup, and Wells Fargo collectively earned more than $49 billion last quarter, a nearly 40% jump from a year ago. The banks benefited from just about every corner of the market. Underwriters raked in fees from the record-breaking SpaceX IPO, traders cashed in as investors rapidly bought and sold AI stocks, and companies racing to invest in AI turned to Wall Street for financing. JPMorgan CEO Jamie Dimon described the conditions as close to as good as it gets, but even he cautioned that no bull market lasts forever. JPMorgan shares ended the week up 1.4 percent, while Bank of America shares rose 2.7 percent. Shares in Goldman Sachs increased about 1 percent.

And now you know what's news in markets this week. You can read about more stocks that moved on the week's news in our live markets coverage on wsj.com. Today's show was produced by Anthony Bansi with supervising producer Melanie Roy. I'm Imani Moise. Have a great weekend and catch you next Saturday.

SPEAKER_1 (5:26)

Fusion powers the sun and stars. General Fusion is working to bring the zero carbon abundant energy source to earth. As global electricity demand surges, Fusion has the potential to deliver clean, scalable power for a growing world. Proudly NASDAQ listed, General Fusion is the first publicly traded pure play fusion energy company in the world. With its magnetized target fusion technology and operational demonstration machine, General Fusion is advancing toward commercialization, targeting a first of a kind fusion plant around 2035