Tech company stocks rise for second day amid Anthropic's IPO filing

Growth amid Anthropic's IPO filing

Technology stocks rose for the second consecutive day on Tuesday after Anthropic, the developer of the Claude AI model, filed for an initial public offering (IPO), reigniting investor optimism about the sector, according to AFP. In New York, the Nasdaq index, dominated by tech companies, rose by more than 1% during midday trading, while the S&P 500 also increased but more modestly, and the Dow remained nearly unchanged. By the close, Nasdaq gained 1.3% to 26,504.59 points, S&P 500 rose 0.7% to 7,726.34, and the Dow stayed at 52,382.94. Shares of Tesla, Nvidia, Apple, and Microsoft increased in value.

What is known about Anthropic's IPO filing

In the IPO filing submitted on Monday, Anthropic reported that revenue in the first half of the year grew by approximately 1300% year-on-year but simultaneously warned of significant upcoming capital expenditures. David Morrison, an analyst at Trade Nation, noted that the potential 'record-breaking IPO' of a five-year-old company bolstered investor confidence following a 'highly turbulent period' for AI-related corporations. According to AFP, the offering is seen as a crucial test of the ability of AI stocks to generate profits; a disappointing reception could further dampen enthusiasm, as traders remain skeptical about massive investments in the sector and the financial health of several companies. The filing itself, as the agency notes, outlines risks facing an industry that has recently encountered a series of negative developments.

Asia and Europe: contrasting outcomes

Anthropic's IPO filing also supported Asian markets. Seoul's Kospi briefly rose by more than 4% during trading, driven by strong gains in chipmakers SK hynix and Samsung, before closing up 3.1% at 5,638.34. Tokyo's Nikkei 225 gained 1.7% to 63,268.37, buoyed by surges in shares of Tokyo Electron, Advantest, and SoftBank. In Europe, the picture was different: London's FTSE 100 fell 0.8% to 10,686.54, largely due to HSBC, whose shares dropped 5.4% after the bank's record profit failed to meet market expectations. In Frankfurt, Mercedes-Benz declined 3.8% following a downgrade of its annual forecast, although the DAX overall closed up 0.7%; Paris also saw gains.

Caution ahead of earnings reports and central bank decisions

The rally was tempered by investor anticipation of corporate earnings reports and central bank meetings. Fiona Cincotta, an analyst at FOREX.com, linked the improved sentiment in the tech sector to the assessment of Anthropic's filing early in a week filled with earnings releases and the Federal Reserve's interest rate decision. Chris Beauchamp, an analyst at IG, suggested that the current upturn might prove more sustainable than last week's, 'with the caveat that numerous macroeconomic risks must be navigated this week.' This week, members of the 'Magnificent Seven'—Microsoft, Alphabet, and Amazon—as well as SK hynix and Samsung, will release their earnings reports. The Federal Reserve is expected to keep interest rates unchanged on Wednesday; however, according to the FedWatch tool from CME Group, there is a 70% probability of a rate hike in December amid rising inflation, which has supported the US dollar. The European Central Bank and the Bank of Japan are also expected to maintain their current policies on Thursday and Friday, respectively.

Major borrowings for AI and oil

The broader context for market sentiment includes massive fundraising efforts for AI development: on Monday, Meta announced plans to raise $35 billion through a stock offering to fund AI development, while Alphabet recently secured $85 billion to expand its data centers. Meanwhile, oil prices fell amid renewed diplomatic efforts to resolve the conflict in the Middle East and parliamentary elections in Israel: Brent crude dropped 1.5% to $114.08 per barrel, and WTI fell 1.6% to $100.09.