Market Update - Disney's "New Era," AI Boosts Arm, Alibaba's Earnings Miss

Introduction:

Here are the key market developments as of Thursday, including Disney's positive earnings report, Arm's growth in the AI sector, and Alibaba's lower-than-expected fourth-quarter income.

1. Futures Subdued:

   • U.S. stock futures showed a subdued start on Thursday after positive corporate earnings in the previous session.
   • S&P 500 futures dipped by 0.1%, Nasdaq 100 futures remained mostly unchanged, and Dow futures fell by 0.1%.
   • The previous session saw Wall Street indices reaching new highs, but concerns linger around Chinese stock market jitters and Federal Reserve officials' comments on interest rates.

2. Disney's "New Era":

   • Walt Disney reported better-than-expected first-quarter earnings, with adjusted profit per share of $1.22.
   • The company highlighted significant cost savings of $500 million, a $3 billion share buyback, and a 50% dividend increase.
   • CEO Bob Iger stated that Disney had entered a "new era" after turning the corner.

3. Arm's AI Boom:

   • Arm, the chip designer, raised its annual guidance as demand for artificial intelligence boosted royalty revenue.
   • Arm's fiscal third-quarter adjusted income per share of $0.29 surpassed estimates, and it expects growth driven by energy-efficient computing and AI capabilities.

4. SoftBank and Alibaba:

   • SoftBank's shares rallied as Arm's value surged, leading to a windfall of around $16 billion for the Japanese investment group.
   • Alibaba reported lower-than-projected fourth-quarter profit, and its shares slumped. The earnings miss is attributed to slower revenue growth in key segments.

5. Deflation in China Deepens:

   • China's consumer prices remained in deflation for the fourth consecutive month in January, contracting by 0.8% on a yearly basis.
   • Economic challenges persist, raising concerns about the country's recovery post-pandemic.

6. Oil Prices Muted:

   • Oil prices were subdued as traders monitored weak economic indicators from China and uncertainties in Israel-Hamas ceasefire negotiations.
   • Brent oil futures rose 0.3% to $79.42, and WTI crude futures climbed 0.2% to $74.04 per barrel.