June 24, 2024

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The Nasdaq stock market appeared last week. But technology may be in trouble

People walk near the Google offices on July 4, 2022 in New York City.

John Smith | Watch press | Getty Images

This report is from today’s CNBC Daily Open, the new newsletter for international markets. The CNBC Daily Open updates investors everything they need to know quickly, no matter where they are. Like what do you see? You can subscribe here.

The Nasdaq outperformed other indices last week. But not everything is rosy in the field of technology.

  • China wants to achieve growth of “about 5%” in 2023. This is what Premier Li Keqiang said, who spoke at the National People’s Congress yesterday. A draft budget at the conference revealed that the country will boost defense spending by 7.2% to 1.56 trillion yuan ($230 billion).
  • Bard, Google’s artificial intelligence engine, is “not search,” Jack Krawczyk, head of product for Google’s Bard, told employees. Instead, Bard Charm is a “Creative Companion.” Employees told CNBC they were confused by Google’s sudden pivot.
  • forefront This week, Federal Reserve Chairman Jerome Powell will speak about the economy before Senate committees, and release the February employment report. Economists expect one of these to be a major market driver; And the other, not so much.

Aided by Federal Reserve official Raphael Bostick’s dovish comments and slumping Treasury yields, US stocks managed to brush off their pessimism and snapped to the end of the week on a high.

The Dow Jones Industrial Average rose 1.17%, giving it a weekly gain of 1.75%, snapping its four-week losing streak. The S&P 500 rose 1.61%, a weekly increase of 1.9% over the course of the week. The tech-heavy Nasdaq Composite rose 1.97%, ending the week up 2.58%. This makes two consecutive months of the Nasdaq outperforming the other indices.

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Not all is rosy in the tech industry. Amazon has stopped building HQ2. Meanwhile, Meta is throwing more money into the loss-making Reality Labs segment. The company has lowered the cost of its virtual reality headsets—by as much as $500 over the higher-end Meta Quest Pro—in an attempt, perhaps, to boost sales.

Not all is well in the vaunted world of AI chatbots. Google has suddenly shifted from its search-first strategy to position Bard as more of a companion to “explore your curiosity,” Krawcyzk told employees, leaving them scratching their heads.

Unpredictable AI chatbots can be really difficult to combine with something fact-based like web search. Remember the fiasco that surrounded Microsoft’s AI chatbot Bing, which threatened users and declared its love for them. (Counting Bing, this is notable human behavior.)

Despite the Nasdaq’s impressive performance this year so far, it remains to be seen if the promises of matching technology come true — and translate into additional gains for the index. Companies should be careful not to hesitate for too long: In today’s high interest rate environment, investors are not as impatient as they were a few years ago.

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