Tech stocks struggle as Arm prepares for blockbuster IPO and Apple unveils new products

Tech stocks struggle as Arm prepares for blockbuster IPO and Apple unveils new products

U.S. tech stocks showed signs of struggle on Tuesday, September 12, 2023, with Apple (NASDAQ: AAPL )'s shares dropping 1.7% following the unveiling of its latest product line, including the iPhone 15 series and the Apple Watch 9. The company's new product launch failed to impress investors, resulting in a drop in share price. This development came amidst a choppy trading session as investors anticipated August's inflation data and the upcoming initial public offering (IPO) of Arm, a Softbank-owned chipmaker.

The focus of Tuesday's trading was largely on expectations for Wednesday's release of the August Consumer Price Index (CPI). Many experts anticipated an acceleration in headline CPI due to a surge in gas prices. However, the core CPI reading, which excludes volatile food and energy prices, was projected to decline on an annual basis compared to July's figure.

"This is one of the last pieces of key economic data ahead of the Fed's rate decision and I think it would take a shockingly hot number to push the Fed to hike next week," said Michael Reinking, senior market strategist at the New York Stock Exchange. Futures traders were pricing in a 93% chance that the Federal Reserve would keep interest rates unchanged at next week's meeting.

In other news, Arm, once a buyout target of Nvidia (NASDAQ: NVDA ), stopped taking orders for its highly anticipated IPO a day ahead of schedule due to high demand. The Arm IPO is expected to be priced at a range of $47 to $51 per share, resulting in $5 billion in new capital for the company and a valuation of approximately $54.5 billion. However, David Trainer, CEO of New Constructs, warned investors against this IPO as he believed the offering creates "a valuation that is completely disconnected from the company’s fundamentals."

Meanwhile, Oracle (NYSE: ORCL ) shares plunged 13.5% after the cloud software company reported higher-than-expected fiscal first-quarter earnings but fell short of revenue estimates. The company also forecast lower-than-anticipated fiscal Q2 results.

The Dow Jones Industrial Average concluded marginally lower at 34,645, while the S&P 500 and the Nasdaq Composite suffered bigger losses, closing at 4,461 (-0.6%) and 13,773 (-1.0%) respectively.

On Wednesday, September 13, 2023, major U.S. indices turned in weaker overnight as big tech stocks faltered despite little change in Treasury yields. The spotlight remained on the U.S. CPI data release, expected to show a resurgence in headline pricing pressures and further cooling in U.S. core inflation.

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