Before the Bell: Banks Get a Breather, New GPT-4 Released, Meta Fires 10,000

Premarket action on Wednesday had the three major U.S. indexes trading lower. The Dow Jones industrials were down 1.59%, the S&P 500 down 1.65% and the Nasdaq 1.36% lower.

All 11 market sectors closed higher on Wednesday. Communication services (2.75%) and technology (2.29%) added the most. Consumer staples (0.88%) and real estate (0.84%) posted the day’s smallest gains. The Dow closed up 1.06%, the S&P 500 up 1.65% and the Nasdaq up 2.14%.

Two-year Treasuries added 17 basis points to end the day at 4.20% on Tuesday, and 10-year notes rose by nine basis points to close at 3.64%. In Wednesday’s premarket, two-year notes were trading at around 4.25% and 10-year notes at about 3.60%.

Monday’s trading volume was above the five-day average. New York Stock Exchange winners outpaced losers by 2,305 to 763, while Nasdaq advancers led decliners by nearly 2 to 1.

Among S&P 500 stocks, First Republic Bank (NYSE: FRC) added nearly 27% on Tuesday to reduce its four-day loss by about 63%. Shares closed at $115.00 last Thursday and at $39.63 on Tuesday. The backstop program put together on Sunday by the Federal Reserve and the Treasury Department appears to have halted a slide that could have taken down a third bank.

Leading Tuesday’s losers, United Airlines Holdings Corp. (NYSE: UAL) dropped 5.37% after CEO Scott Kirby told an investor conference that the airline has reduced its outlook for the quarter and is projecting a loss. Kirby cited weak demand growth in January and February, higher fuel costs and contract negotiations with United’s pilots’ union. First-quarter earnings guidance was lowered to a loss per share of $0.60 to $1.00, sharply lower than the consensus estimate for earnings per share of $0.66. The company reaffirmed full-year guidance for earnings of $10.00 to $12.00 per share. The consensus estimate calls for earnings per share of $8.60.

Tuesday’s release of the consumer price index (CPI) for February showed core prices were up 5.5% year over year, and overall prices were up 6.0%. Before U.S. markets open on Wednesday, the Bureau of Labor Statistics will release producer price index (PPI) data for last month. Economists’ consensus estimate calls for a month-over-month increase of 0.4%, compared to January’s rise of 0.7%.

The Census Bureau’s monthly report on retail sales also will be released early in the morning. Economists expect an increase of 0.4%, considerably lower than January’s increase of 3.0%.

Also on the schedule for Wednesday morning is the weekly report from the U.S. Energy Information Administration on petroleum inventories. Late on Tuesday, the American Petroleum Institute reported that U.S. commercial crude oil inventories rose by about 1.2 million barrels last week, while gasoline inventories fell by nearly 4.6 million barrels and distillates (diesel fuel) fell by 2.9 million barrels.

Meta Platforms Inc. (NASDAQ: META) got a share price boost of more than 7% on Tuesday following an announcement that the Facebook company would lay off another 10,000 employees and leave 5,000 open jobs unfilled. Last November, the company axed 11,000 workers. This is CEO Mark Zuckerberg’s way of implementing Meta’s so-called year of efficiency. The company also for six months will stop considering new applications from employees to work from home or for transfers within the company.

Meta’s share price has risen by 28% over the past six months and by more than 60% since January. Over the past 12 months, the shares are up about 4%. There is nothing like firing lots of people to keep investors happy.

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OpenAI, the startup that has convinced Microsoft Corp. (NASDAQ: MSFT) to pour billions into its AI chatbot, ChatGPT, released an updated version of the program on Tuesday, GPT-4, that OpenAI claims produces “safer and more useful responses.”

So, it gets worse the more you use it? That’s not exactly a confidence-builder.

The updated chatbot performed better than its predecessors on a variety of standardized tests; for example, scoring in the 90th percentile on the uniform bar exam compared to the performance of its previous version which only made it to the 10th percentile. GPT-4 also can interpret visual images and generate text output based on the images.

Not to be outdone, Alphabet Inc. (NASDAQ: GOOGL) took the wraps off a number of AI tools for its email and Docs software, beating Microsoft to the punch. The Redmond giant is expected to announce next week that it has included some AI capability in its Word text processor.

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