Tuesday, September 27

Tech giants sink on Wall Street amid sharp rate hikes

The Dow Jones Industrial Average fell 1.5%; while the S&P500 index also lost 1.5%; and the Nasdaq Composite Index was down 1.7%.

For his part, andTwo-year bond yields, which track short-term interest rate expectations, topped 1% for the first time since February 2020, within the framework of a positioning of the operators before the possibility that the Federal Reserve hardens its tone before the monetary policy meeting that it will hold next week.

Mega-cap firms like Alphabet (Google), Apple, Meta (Facebook), Amazon and Tesla lost between 0.6% and 3.7%.

Ten of the 11 major S&P 500 sectors fell in early trading. Strong growth indices such as technology and communication services led the losses.

“Technology is going to be divided between the companies that make money today and those that promise to make it tomorrow,” said Thomas Hayes of Great Hill Capital LLC in New York. “Companies that promise to make money tomorrow, but don’t make money today, are going to take big cuts.”

Goldman Sachs plunged more than 8% after missing fourth-quarter earnings expectations on weak trading activity, while BNY Mellon fell 1.1% after publishing its quarterly results.

The S&P 500 banking index fell 1.2% and the broader financial index slumped 1.6%. Energy was the only S&P 500 sector to gain, buoyed by rising oil prices.

Wall Street was closed on Monday for a holiday and all three indices had ended the previous week slightly down.

Microsoft buys Activision Blizzard for $68.7 billion

Microsoft offered on Tuesday to buy the maker of the “Call of Duty” video game, Activision Blizzard, for $68.7 billion in cash, the largest deal in the industry. and what would turn the Xbox maker in the third game company by revenue.

Microsoft’s offer of $95 per share represents a 45% premium from Activision’s Friday close. Activision shares soared nearly 38% to $65.39. before their trading was suspended by the news.

“Video games are the most dynamic and exciting category of entertainment on all platforms today and will play a key role in the development of metaverse platforms,” Microsoft Chief Executive Satya Nadella said in a statement.

The demand for video games has increased during the pandemic, as homebound consumers play more to keep themselves entertained.

Activision’s video game offerings, such as “Call of Duty” and “Overwatch,” also give Microsoft’s Xbox platform an advantage over Sony’s Playstation, which for years has enjoyed a more steady stream of exclusive video games.

Shares of the “Candy Crush” maker have plunged more than 37% since hitting an all-time high last year, largely on allegations of sexual harassment and other misconduct within the company. Bobby Kotick will remain the CEO of Activision Blizzard.

Last week, rival video game company Take-Two Interactive Software Inc said it would buy “FarmVille” creator Zynga in a deal for $11 billion in cash and stock.