Tech Stocks and Bond Yields Don’t Often Rise Together. Why It Won’t Last.

There wasn’t even much in the way of major news, traders are just getting more convinced that interest rates will stay higher for longer. The market now sees a 45% chance of another hike by the Federal Reserve’s November meeting, up from 31% a month ago, according to the CME’s FedWatch tool.

At the same time, tech investors are starting to hope the recent selloff may soon reverse. The Nasdaq Composite snapped a four-day losing streak Monday.

Tech stocks and bond yields moving in tandem is something that is unlikely to last.

It highlights the split focus of investors in a week that not only contains Nvidia’s eagerly awaited earnings but concludes with an equally as anticipated speech by Federal Reserve Chairman Jerome Powell at the Jackson Hole symposium.

The two events are seemingly being treated separately right now, but they will soon merge in the minds of investors as the week comes to a head.

The current tug of war suggests Powell, and any comments he makes on rates, may not have any sway over tech stocks. But he’ll have the bond market in the palm of his hand when he takes to the stage Friday.

—Callum Keown

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Arm Holdings Files Plan for Long-Anticipated IPO

Chip design firm Arm Holdings has filed long-anticipated paperwork for a U.S. listing in what could be the biggest initial public offering this year. Technology and IPO observers will be closely watching the process amid a sluggish period for tech stock debuts since last year.

• Arm filed paperwork with the Securities and Exchange Commission late Monday for an initial public offering on the Nasdaq. The company will be listed under the ticker symbol “ARM,” with its American depositary shares (ADS) representing its ordinary stock.

• Arm in its filing reported revenue of $2.68 billion for the fiscal year ended in March 2023, down slightly from the prior year’s $2.7 billion. For the same period in fiscal 2023, the company generated net income from continuing operations of $524 million, down from $676 million the prior year.

• Arm makes money from licensing its chip architecture and other chip design technologies to semiconductor companies and hardware makers. The company says its technology powers chips inside nearly every smartphone, including Apple’s iPhone and most Android-based devices.

• Japan’s SoftBank bought the U.K.-based chip maker for $32 billion in 2016.
  Nvidia
  offered to buy Arm for $66 billion in 2020, but abandoned the plan last year after global regulators and other chip companies challenged it.

What’s Next: An ARM representative wouldn’t offer details on the timing of the IPO. SoftBank has previously tried to position Arm with a valuation of $60 billion to $70 billion, according to reports. Barclays, Goldman Sachs, J.P. Morgan, and Mizuho are managing the proposed offering.

—Tae Kim and Janet H. Cho

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Microsoft Submits New Activision Deal to U.K. Regulator

Microsoft and Activision Blizzard have submitted a new deal to the U.K. regulator, which to date has refused to wave through their $75 billion merger. The fresh proposal will prompt a new probe.

• Microsoft plans to sell the non-European streaming rights to Activision games to Assassin’s Creed publisher Ubisoft. Microsoft will not be able to acquire cloud rights for current Activision games, or any new games released over the next 15 years, the U.K.’s Competition and Markets Authority (CMA) said. Ubisoft will be able to license out Activision’s content to any cloud gaming provider, it added.

• The CMA blocked the original deal to “protect innovation and choice in cloud gaming.” It said the restructured deal will be investigated with a deadline of Oct. 18 for a decision.

• Microsoft said in a statement late Monday: “We believe that this development is positive for players, the progression of the cloud game streaming market, and the growth of the industry.”

What’s Next: As the last major regulator left blocking the deal, the CMA faced pressure over whether it would stand its ground or follow the rest of the world. But for Microsoft and Activision, a fresh investigation means an even longer delay for the merger, and no guarantee of approval.

—Callum Keown

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American Airlines Joins Other Carriers With Boost to Pilot Pay

Pilots for
American Airlines Group
are getting an immediate pay raise of 21% in a new contract they just ratified after the carrier sweetened its earlier offer. Over four years, the new contract will raise pay 46%, plus make scheduling and other changes sought by the union.

• The pay raise is about $9.6 billion over the previous contract, the union said on Monday. American is joining
  United Airlines
  and
  Delta Air Lines
  in raising pay for pilots. United’s contract raises pay 40%, or $10 billion, over four years.

• Carriers have been under pressure amid employee shortages, including pilots, and union demands for higher pay and improved working conditions. An earlier offer from American fell through after United pilots agreed to their deal in July.

• Southwest Airlines
  is the last of the four major carriers to reach at least a preliminary agreement with pilots. It began negotiations in March 2020, later than the other carriers.

• The vote among American’s pilots finished with 73% approving the ratification of the contract, which means they will get more pay when they are reassigned, in training, or going on vacation. The carrier is boosting 401(k) retirement plan contributions and other benefits.

What’s Next: American’s CEO Robert Isom said the agreement would help the carrier expand its pilot training capacity to support under-utilized aircraft and future flying and give pilots more opportunities to progress in their careers.

—Liz Moyer

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Goldman Sachs Considers Another Main Street Exit

Goldman Sachs
is weighing the potential sale of its personal financial management business—a wealth advisory division for the mass affluent segment—as it continues to unwind CEO David Solomon’s attempts to expand the bank’s reach beyond trading and deal making to Main Street.

• Goldman said it is currently evaluating alternatives for the business, which oversees about $29 billion in assets and grew out of United Capital, a California-based registered investment advisor Goldman bought for $750 million in 2019. Goldman traditionally advised the ultrahigh-net-worth market.

• Overall, Goldman’s wealth management business has $1 trillion in assets under supervision spread across 16,000 clients. The move comes amid a slump in deal-making and missed profit expectations. Several former high-ranking United Capital executives have left, including founder Joe Duran.

• Although personal financial management is a small component of Goldman’s wealth business, it still sees “continued opportunities” to invest in it, but with less strategic impact on GS. Goldman said it expects to find an outcome that benefits both its clients and advisors.

• Goldman also plans to sell GreenSky, an online lending platform it acquired in 2021. It is winding down Marcus, the online consumer-banking business it started in 2016, including the sale of some of the lending portfolio earlier this year to narrow the bank’s focus.

What’s Next: Goldman has also been looking to get out of an agreement with Apple to provide a credit card, The Wall Street Journal has reported. But it recently introduced a savings account for Apple Card users through its Utah-based bank that has already gathered $10 billion in deposits.

—Carleton English, Andrew Welsch, and Janet H. Cho

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Meta Platforms Is Preparing a Desktop Version of Threads

Meta Platforms
is preparing to introduce a web version of its Threads microblogging app this week as Mark Zuckerberg’s company heats up the competition with Elon Musk’s X, the social-media platform formerly known as Twitter. Threads started in July as a mobile app.

• The timing comes as Threads is losing momentum. After attracting more than 100 million sign-ups in just five days, the numbers have dropped. Time spent on the app is down 85% more than a month later, according to analytics firm SimilarWeb.

• A web version of Threads could help lure back users and make it easier for them to find and share posts and get more engagement on the platform. Meta didn’t respond to Barron’s for a comment.

• Adam Mosseri, head of Instagram, which is also owned by Meta, said in a post last week that the company has been using a web version of Threads internally for a week or two, but that it still needs some work before going live to all.

• Mosseri said last month that “tons of basics” were missing when Threads started out, but that his team was working on new features and changes. Users can now share threads on Instagram direct messages, sort the accounts they follow, and see the threads they have liked.

What’s Next: Meta CEO Zuckerberg said on Threads earlier this month that the company plans to roll out an improved search feature in the next few weeks. Currently, users can search for other people’s profiles on the platform but not keyword topics.

—Callum Keown and Janet H. Cho

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—Newsletter edited by Liz Moyer, Patrick O’Donnell, Rupert Steiner