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Amazon Staring at $100 Billion Opportunity with Logistics Network

Amazon is on the cusp of unlocking a $100 billion opportunity, having made a name for itself as an e-commerce juggernaut. While the focus has been on the company’s growing cloud unit, the tech giant’s robust supply chain network has the potential to take the company to new heights.

Unlocking Logistics Opportunity

According to Truist Securities analyst Youssef Squali, Amazon becoming a logistics shipping and distribution juggernaut could unlock more than $100 billion in revenue. Everything hinges on the Seattle-based company turning its logistics network into a service offering for third parties or Amazon merchants.

Amazon has enhanced its supply chain network as part of an effort to improve same-day delivery. Consequently, it has become a leading logistics company overseeing orders’ flow to people’s doorsteps. By opening up the network to third parties, the company will have the potential to unlock value as ocean freight. It will also be in a position to enable ground transport and inventory storage through which it can unlock significant value.

The tech giant has already started integrating artificial intelligence technology into its supply chain network. The integration ensures the network runs efficiently and that goods are shipped efficiently without any mishaps and delays. For instance, the company is using the technology to safeguard some goods stored in facilities where demand is high, limiting the shipping time.

It would not be the first time the tech giant has opened a service initially designed for in-house operations. The company unveiled the cloud business to serve its own needs. However, with the growing demand for cloud solutions, the company built Amazon Web Services and opened it to other clients. The cloud unit has become a multi-billion empire and a key earnings driver.

Amazon opening up its logistics network is a brilliant idea that would create yet another empire and diversify its revenue base beyond e-commerce and cloud.   The company is under immense pressure to unlock new opportunities and offset a slowdown in revenue growth.

Amazon’s revenue growth slowed to 9% last year, marking the slowest-ever expansion. Nevertheless, it is expected to bounce back and rise by 11% to $570 billion in 2023. Therefore, unlocking new revenue opportunities on the supply network could strengthen the company’s sentiments in the market.

Amazon Valuation

Amazon stock is up by more than 50% year to date, outperforming the overall market. The impressive run has come against the backdrop of the tech giant embarking on a cost-cutting drive to boost profits. Faced with rising inflations and declining consumer spending power the company was forced to lay off staff as part of cost saving measure. It has also had to shelve some ambitious plans to save on costs.

While the company’s valuation has dropped since last year, it still trades at 34 times projected profit, one of the most expensive of other big technology companies. The premium valuation is yet to deter analysts from bullish on the sock, with 63 analysts tracking the stock insisting it is a Buy. The average price target implies Amazon stock has the potential to gain over 30% from current levels.

Google Insiders Question Bard Worth amid Massive Investments

Google insiders are having second thoughts about the artificial intelligence-powered chatbot Bard. Barely a year after unveiling it as a response to OpenAI’s ChatGPT, Google product managers and engineers have started questioning whether the enormous resources put together to develop the AI tool are worth it.

Bard Concerns

Concerns about Bard’s reliability have been laid bare on chart platform Discord as part of discussions between high-profile people working on it. Dozens of messages reviewed show how the AI-powered tool is being used and critiqued by some people who know it best, especially the company’s leaders. Dominik Rabiej, a senior product manager for Bard, has already suggested limiting people’s use of the tool to creative or brainstorming applications.

Nevertheless, the debate about Bard’s limitations and potential on the Discord channel is unsurprising as it is part of the development process. Since launching the tool, Google insists it is eager to hear people’s feedback on improving it. The company has been clear about its limitations, including the possibility of the tool generating convincing-sounding lies.

The skepticism comes despite Alphabet’s Google adding new features and upgrades to make Bard highly competitive to take on ChatGPT. The AI tool can now analyze photos and generate responses to queries in dozens of languages. Google has integrated the tool into its most popular services, such as Gmail, Maps, Docs, and YouTube.

The massive integration is part of Google’s push to fend off the threat posed by ChatGPT, which has been integrated into Microsoft’s search engine Bing. Google unveiled Bard as one way to protect its search engine by offering people an alternative to ChatGPT-triggered searches online.

Amid the upgrades and integration into core products, Google has to contend with a wave of complaints about the tool. For starters, there have been concerns that Bard sometimes generates made-up facts. The device has also been accused of giving potentially dangerous advice. Even though Google has introduced a search button that helps people double-check the tools generated responses, the complaints have kept on piling.

In addition to complaints about responses, Google has also been embroiled in controversy over the working conditions of people or contractors that work on training Bard. Most workers have been crying out when asked to complete tasks within minutes. The search giant has also been accused of providing low-quality information as it tries to keep up with competition.

Bard Long Term Use

Amid the challenges, Alphabet’s Google has no option but to ensure Bard works and becomes a preferred AI tool in the burgeoning sector. It is the only way the tech giant will succeed in safeguarding its monopoly on search. Microsoft has already invested about $10 billion in OpenAI as it sees ChatGPT as the tool to enhance Bing’s competitive edge on search.

As Generative AI explodes into the scene, Google search dominance is under threat more than ever as most people resort to AI-powered tools for searching online. Google’s faltering on Bard could pose a significant danger to its search position with the emergence of more buzzy tools from OpenAI to others.

Google to Provide Doctors With New Generative Artificial Intelligence Search Capabilities

Google Cloud recently announced new AI-powered search functionalities that it claimed will help doctors and health professionals quickly get accurate clinical data from different kinds of medical reports and records.

The healthcare and medical space is home to tons of valuable data and information. However, it can sometimes be very difficult for doctors to find that same information since it is often stored across many different formats and systems. The new search tool from Google Cloud will allow clinicians to pool data from electronic health records, scanned documents, and clinical notes into one place for easy access.

What does Google say?

The company claimed that the new capabilities will eventually help save healthcare professionals a huge amount of both energy and time.

Google AI at Google Cloud’s senior director of project management, Lisa O’Malley said, “While it should save time to be able to do that search, it should also prevent frustration on behalf of clinicians and [make] sure that they get to an answer easier.”

For example, if a physician wants to know the history of one of their patients, they don’t need to read through their electronic health records, faxes, and notes separately anymore. Instead, doctors can search queries like “What medicine has this person taken in the past 6 months?” and find all the relevant data related to that query in one place.

Doctors can also use these new search capabilities for other vital applications like determining whether a patient meets the criteria for a certain clinical trial and inputting correct billing codes. She added that the tech can link to and cite the original source, which it’ll get directly from an institution’s own internal data.

Google’s vision for this new technology

Google hopes these new capabilities will help decrease the amount of time and energy doctors usually spend when digging through medical databases and patient records.

O’Malley said, “Anything that Google can do by applying our search technologies, our health-care technologies and research capabilities to make the journey of the clinicians and health-care providers and payers more quick, more efficient, saving them cost, I think ultimately benefits us as patients.”

The new functionalities will be provided to life sciences and health organizations via the Vertex AI Search platform, also by Google, which corporations in other industries are already using to do their searches across public databases, documents, and websites.

Google Cloud global director of healthcare and solutions, Aashima Gupta said, “These are the workflows that the physicians and nurses live by day in and day out. You can’t be adding friction to it. We are very cautious of that — that we are respecting the surface they use, that the workflow doesn’t change, but yet they get the power of this technology.”

Tesla Dominance Threatened as BYD EV Sales Explode

Tesla’s dominance in the sale of electric cars is under immense pressure more than ever. While the US EV giant has dominated the sector for years, competition is slowly catching up as cheaper alternatives hit the market. Chinese EV giant BYD Co appears to have everything going for it in the race to topple the US automaker.

BYD vs. Tesla EV Sales

The Chinese electric car giant came to a whisker from toppling Tesla in the third quarter on selling 431,603 fully electric cars. The sales represented a 23% increase from the second quarter. In contrast, Tesla shipped 435,059 electric cars, signalling the narrowing of the gap between the two companies.

The impressive numbers posted by the Chinese automaker came on pushing into new markets and wooing customers with more affordable electric vehicles than Tesla.  The Shenzhen-based automaker sold 822,094 vehicles, including hybrids, propelling it to another record quarter, which affirms its status as China’s best selling automaker.

On the other hand, Tesla struggled with factory downtime in the quarter, which triggered the first quarterly delivery decline in nearly a year.  The company missed deliveries by about 20,000 units, hurt by a move to take some factories offline to make them more adaptable for a refreshed Model 3 sedan. The US automaker is also preparing the factories to accelerate production of the yet-to-be-released Cybertruck.

The premium price that the US automaker charges for its EV models might also have a hand in limiting the amount of cars it could sell compared to the run rate at BYD. Nevertheless, CEO Elon Musk insists the company is on track to deliver over 1.8 million vehicles by year-end. On the other hand, BYD is targeting 3 million cars, including hybrids.

EU Tariffs on China EVs

While BYD has made a name for itself in selling affordable electric cars to the masses, the company is also increasingly encroaching into the higher-end markets. The company has already unveiled two luxury EV brands as it looks to enjoy the bumper profit margins that Tesla enjoys on selling premium EVs. Yangwang and Fang Cheng Bao are the two models that the Chinese EV company hopes to use to penetrate the $137,000 price category.

In addition, the Chinese automaker has also set sights on the international market as it looks to explore new revenue opportunities beyond China.  It has also started to make its own batteries and semiconductor chips as it looks to keep production costs lower to have a better chance of a large chunk of the overseas sale market.

The biggest headwind standing in the way of BYD conquering the international market is heightened regulatory scrutiny. Regulators have already set sights on the company and Tesla over Chinese subsidies on EVs. The regulators insist the subsidies offer the two automakers a competitive advantage against European automakers.

European officials are concerned that an influx of Chinese electric vehicles into the block would threaten millions of auto jobs; consequently, the officials have launched an investigation into China’s support for the EV industry to counter them to protect the region’s auto industry.  There are suggestions that the EU could end up imposing tariffs on Chinese EV imports, something that could also affect Tesla, which produces most of its cars in China.

Tech stocks started the year on a roll driven by expectations that the US Federal Reserve will go slow on interest rate hikes. The hype over artificial intelligence also fuelled the rally, resulting in the tech-heavy Nasdaq index rallying by more than 40% at some point. Fast forward, the momentum has faded, and the index has posted its biggest loss for the year, raising serious concerns in the market.

Market Correction

The Nasdaq Index fell by about 4.8% in September, signaling a buildup in selling pressure among tech stocks. Following the deep pullback, strategists at  Goldman Sachs believe tech stocks could be about to turn the corner. The deep correction has essentially led to cheap valuations at a time when earning estimates are still rising amid solid underlying fundamentals.

Following the deep correction, the price/ earnings to growth ratio (PEG), which calculates price relative to earnings and long-term growth, has shrunk to 1.3 on the Nasdaq index. In contrast, the PEG median on the S&P 500 stock stands at 1.9. For the Nasdaq, it is the largest discount in nearly six years. The level has only been recorded five times in the last decade.

The cheap valuations could act as an opportunity for investors who missed out on the initial move higher to join the rally train. In a research note to investors, Goldman Strategists Cormac Conner and David Costing reiterated the divergence between falling valuations and improving fundamentals presents a tremendous opportunity for investors.

Earnings Boost

The focus now turns to third-quarter earnings that could act as a catalyst to trigger a bounce back after the recent correction. Expectations are high around tech stocks delivering better-than-expected results on the back of solid fundamentals in the third quarter. Profit upgrades among the tech stocks continue to outnumber downgrades, which should offer more support to potential bouncebacks.

Analysts are projecting technology stocks to post earnings growth in the upwards of 4.3%. The strategists are also confident of sector performance during the reporting season, given that the largest tech stocks have always outperformed the S&P 500 by more than 60% since 2016.

Likewise, the strategists are confident of US stocks even though they have come under pressure in the aftermath of the FED remaining hawkish. Stocks have pulled back significantly, having become clear the FED is not planning to cut interest rates anytime soon. With the high-interest rate environment, there have been growing concerns that access to cheap capital will be difficult, which could fuel the recession prospects.

Market Outlook

Nevertheless, the Goldman strategists are confident of the Nasdaq 100 finishing the year at 4,500, representing a 5% gain from current levels. Consequently, the index will recoup all the losses accrued last year when it fell by 19.4%. The strategist is also bullish about further upside over the next 12 months on the US economy, avoiding a deep recession.

On the other hand, strategists at RBC Capital Markets led by Lori Calvasina expect weakness in US stocks to continue after the recent correction. According to the analysts, there is room for investors to be more pessimistic, given that the AAII Investor Sentiment Survey, which measures net bullishness, has dropped sharply since mid-August.

It’s a big win for SpaceX on securing its first contract from the US Space Force. The multimillion-dollar contract will see the space company offer customized satellite communications for the military under its new Starshield program. Founded by Elon Musk, the company is competing against 15 other companies also looking to secure work orders as part of the $900 million program by the Space Force.

Space Force Contract

The space company secured the one-year contract on September 1 with a $70 million ceiling. It requires the company to offer Starshield end-to-end service via the Starlink constellation, user terminals, ancillary equipment, and other related services. SpaceX unveiled Starshield as a new business line last year and has successfully attracted the Pentagon as a high-value buyer.

The US Space Force is looking for satellites that will enable communication from 100 miles to 1,000 miles above the Earth’s surface. SpaceX can offer the satellites under its new Starshield service, which features a constellation of Starlink communication satellites. In June, the company secured a contract of undisclosed value to provide Starlink satellite communications to the Ukrainian military.

SpaceX secured the multimillion contracts given the strides it has made in launching satellites and carrying out space exploration. The new contract expands Musk’s portfolio, becoming a new defense contractor. SpaceX has seen its portfolio of Pentagon-linked business and contracts increase significantly in recent years. It is seen as one of the companies that will accelerate the US push to explore space.

Nevertheless, the company has been embroiled in stiff competition with other companies also eyeing the lucrative contracts from the defense department. United Launch Alliance, a joint venture of Lockheed Martin and Boeing Co., poses the biggest competition, given its capability to send up national security payloads to space.

Musk Russia Ties Concerns

Amid the influx of contracts from the US Department of Defense, SpaceX has also been scrutinized amid growing concerns about Musk’s ties with Russian President Vladimir Putin. Musk’s conversations with Putin have often sparked concerns about his reliability as a Pentagon Supplier, putting SpaceX under lots of scrutiny.

Last year, Musk was embroiled in a fierce standoff after he turned down a request from Ukraine’s government to extend Starling coverage on Russia-held Crimea. Ukraine wanted to use the coverage to carry out a naval drone attack on Russian targets. As SpaceX becomes one of the biggest DOD contractor and a critical industry partner, lawmakers have raised concerns over the company’s willingness to interrupt service at Musk’s request.

The wave of concerns is likely to continue SpaceX’s push to become a prime defense contractor and industry player capable of securing billions of dollars in taxpayer funding. The company has already launched its 67th rocket this year, affirming its workhorse booster.

The Star Link launch marked an important milestone as it was the first time the company reused a Falcon 9 first stage 17 times. SpaceX has been able to push the limits of booster reuse while maintaining a 100% record of success across its Falcon 9 rocket launches.

Cathie Woods Touts Nvidia Alternatives For Tapping AI Boom

Better bets exist for tapping into exponential growth of artificial intelligence. That is a sentiment echoed by Ark Investment Management head Cathie Wood. She made the remarks at a time when most focus is on Nvidia, the tech giant developing chips for powering artificial intelligence solutions and products.

Nvidia Premium Valuation

Nvidia has been the go-to company for investors looking to generate significant returns amid the increased focus on AI. Similarly, the stock has not disappointed, having rallied by more than 200% year to date, having become a Wall Street darling. The rally has since propelled the chip giant into a trillion-dollar company, with most investors confident that the rally will persist.

Wood, through the ARK Innovation ETF fund, has missed out significantly on the significant gain registered year to date. The hedge fund manager trimmed his exposure in the chip giant early in the year on the belief that the stock was overstretched. Nevertheless, Nvidia continued rallying, breaking all kinds of records. Its 2005 gain gas already dwarfed the 37% gain for the tech-heavy index NASDAQ and the 15% gain for the S&P 500.

Thanks to the strong demand for its chips, Nvidia has turned out to be a safe bet for gaining exposure in the AI boom. Its chips are increasingly being used to power emerging AI tools, including OpenAI’s ChatGPT and Alphabet’s Bard. The rapid growth for AI services has only triggered strong demand for the chips, helping bolster its sentiments in the market.

The fact that Nvidia appears to be working on a new era of accelerated computing that can enervate as much as $1 trillion in each spending has only strengthened its sentiments in the market. The solid underlying fundamentals have only justified the premium valuation that the stock enjoys in the market.

Nvidia Alternatives

While trying to downplay the big miss, Wood insists they are focused on other companies with significant exposure to the AI boom that most people are not talking about. According to Wood, investing in the chip giant at current valuation levels would make little sense as it has become really expensive. Consequently, they have shifted their attention to other software companies that are less obvious plays and less expensive.

UiPath Inc. and Twilio Inc. are some of the companies that ARK Investment remains bullish on amid the AI push. According to Wood, UiPath has a fantastic management team backed by a solid core business that entails automating management tasks and internal workflows. According to the hedge fund manager, the company could become a platform that all companies can build on.

Twilio is another exciting play for gaining exposure to the AI boom beyond Nvidia, as it is best known for facilitating business-to-consumer messaging. The company has already inked big business to power Uber Technologies messaging on the ride-hailing platform. The company enabled over 1 trillion messages between consumers and businesses last year, giving it access to huge troves of data. Uber has already started leveraging the troves of data at its disposal to come up with an artificial intelligence-powered chatbot. The chatbot is designed to offer recommendations to enhance its food delivery business and order placement.

Microsoft Upgraded Amid Artificial Intelligence Push

Microsoft has been one of the best-performing stocks, rallying by more than 30%. The rally, which has seen it outperform the S&P 500, which is up by about 15%, has come on the tech giant benefiting from the artificial intelligence boom.  With the boom, many analysts and investors have turned bullish and confident about the company’s long-term prospects as it continues to explore ways of benefiting from the AI boom.

Microsoft Upgrade

The upgrade from a sell to a neutral rating means that nearly 90% of analysts have a buy rating on the stock, with the rest maintaining a sell rating. The recommendation consensus on the stock stands at 4.74 out of 5, which is the fourth highest in the Nasdaq 100 index.

Following the upgrade, the stock does not have any sell rating on the street. However, the analysts at Guggenheim are still on the fence, thus the neutral rating. The analysts are questioning how much of the generative AI narrative will be monetized and generate significant value for Microsoft and other companies betting on the technology.

In addition, in a research note to investors, Guggenheim has also raised concerns about Microsoft’s struggles with its Windows product, which it says faces troubling dynamics. The research firm also feels growing pains in the market with the Azure cloud computing business, which could weigh on the stock’s sentiments.

Microsoft faces stiff competition to strengthen its cloud edge. Google and Amazon have also been spending big, especially on artificial intelligence innovations and solutions to strengthen their cloud unit. Competition from other smaller players also poses significant competition and danger to Azure Cloud.

Nevertheless, Microsoft is also maintaining a close eye on artificial intelligence, a technology expected to impact various solutions and products significantly. The software giant has already invested more than $10 billion in AI startup OpenAI, consequently gaining access to ChatGPT, one of the most talked about chatbots.

Microsoft AI Push

Microsoft CEO Satya Nadella has already made it clear that the company that becomes a market leader in artificial intelligence will garner a lion’s share of the riches in the technology over. Therefore, the executive is going all out to make Microsoft, a leading provider of AI solutions to, cash in on the new trend.

The $10 billion investment in OpenAI has enabled Microsoft to integrate ChatGPT in its search engine, Bing, strengthening its competitive edge against Google search. In addition, the search giant has also gained access to OpenAI AI resources and development resources. In return, Microsoft has built its own AI products and services, including Azure AI, a cloud-based service that offers access to tools for developing AI solutions.

Microsoft has also started integrating AI solutions into its traditional products, including Word, Outlook, and PowerPoint.  It’s also developing new features such as Windows Copilot, an AI assistant for Windows devices.  Competition for AI dominance is stiff, with Amazon, Google, and Meta Platforms also investing billions of dollars into emerging technology.

The AI boom spectacle also has been priced in significantly. Microsoft stock has come under pressure in recent days, recording seven consecutive days of losses. Nevertheless, the stock is still up by more than 30% for the year.

Microsoft Xbox Console Upgrade Leaks Activision Deal Approval Drags

Microsoft is planning for an Xbox console refresh and launching new video games as it seeks to strengthen its dominance in the multibillion-dollar gaming industry. The revelations became clear after his software giant mistakenly shared confidential information of its video game operations on a federal court website.

Xbox Console Leak

The documents shared on the website were part of exhibits that the company is trying to use to lure the FTC to approve its proposed $69 billion takeover of Activision Blizzard. The information shared mistakenly also includes discussions the company held as part of its push to acquire Nintendo.  Given that some of the information shared on the website included nonpublic information, they have been deleted from the website.

The FTC insists it was not responsible for uploading the crucial data. The mishap occurred from Microsoft’s side when it uploaded key data and evidence as part of its ongoing case with the FTC over the Activision Blizzard acquisition push.

Nevertheless, the damage has already been done, given that information regarding new console upcoming titles, mergers, and acquisitions is usually a closely guarded secret. The information mistakenly shared about Xbox consoles will be closely followed and analyzed by competitors looking to gain a piece of the multi-billion gaming industry.

Microsoft has sought to discredit the information that was accidentally leaked. Video game chief Phil Spencer has already poured cold water on sharing any trade secrets, insisting that the information on the website is outdated and that so much has changed.

The leaked information showing Microsoft intends to update its Xbox console contrasts revelations made in June. At the time, Spencer insisted there were no plans or need to update the current Xbox. However,   it is a known secret that the company is working on new features for its consoles as it looks to fend off any threat posed by Sony, one of the biggest players in the console business.

Nevertheless, it is not the first time that crucial information has leaked mistakenly. In June of this year, Sony found itself in a similar debacle after confidential documents leaked. The documents contained data showing the amount of revenue that the Japanese company generated from Activision’s Call of Duty and the game development costs it incurred.

Microsoft Activision Merger

Since Microsoft announced plans to acquire Activision Blizzard for $69 billion, enforcement agencies worldwide have adopted divergent views in response. The European Union antitrust commission and the South African Competition Tribunal have both approved the merger. In the United Kingdom, the Competition and Markets Authority has blocked the deal with the FTC yet to make a decision, although it has shown signs of opposing it.

Activision’s Call of Duty game has become the main center of attention for enforcers, raking in billions of dollars in sales since inception.

There are growing concerns that a merger between Microsoft and Activision will lessen competition in the cloud gaming market, given the amount of power the combined company will wield. There is growing concern that Microsoft will limit access to the Call of Duty game.  Activision Blizzard has sought to push for approval in the US and the UK by announcing plans to sell its streaming rights to Ubisoft Entertainment.

Short Bets on Nasdaq 100 Soar as Investors Shun Tech Stocks

Investors are increasingly shunning tech stocks concerned by the high interest rate environment and premium valuation after an explosive run in 2023. Tech-heavy Nasdaq 100 has started seeing outflows depicted by the index pulling back from record highs. The index has been under pressure since July, signaling waning upward momentum.

Nasdaq Short Bets

According to strategists at Citigroup, investors are increasingly positioning for more losses on the tech-heavy Nasdaq 100. Fuelling the sentiments is the fact that the index is down by more than 5% from its all-time highs over the past two months. Likewise, the index attracts more bearish flows, leaving positioning heavier on short bets than longs.

The increased short bets contrast with the bullish momentum at the start of the year that saw the index attract strong buying pressure with every minor correction. According to strategist Chris Montagu of Citigroup, only some investors are comfortable maintaining a bullish view. The sentiments do not come as a surprise as most investors feel the index is overbought after a 37% plus rally since the start of the year.

The Nasdaq 100 has benefited from a strong buzz around artificial intelligence. Stocks exposed to revolutionary technology have been on an impressive run led by Nvidia, which has rallied by more than 200% year to become a trillion-dollar empire. The likes of Meta Platforms, Apple, Google, and Microsoft have also helped offer support to the index.

Nevertheless, there have been concerns that the impressive run in the Nasdaq 100 does not paint an accurate picture of the overall market. For starters, there have been concerns that the rally has been concentrated on a few cliques of tech stocks, which raise concerns about the sustainability of the upward momentum.

Client flows showing that tech stocks had the biggest redemptions from the week through September 15 could be an early warning sign of growing jitters in the sector. After an explosive start to the year, investors feel most tech plays are overstretched and need correction as valuations have skyrocketed significantly.

Fed Monetary Policy

In addition to valuation concerns, uncertainty over monetary policy also continues to send shockwaves in the investment community, forcing most investors to remain on the fence. The US Federal Reserve remaining hawkish about interest rate hikes is a tailwind that continues to fuel selling pressure among tech stocks.

The economy has remained resilient after increasing interest rates at the highest pace to above the 5% threshold, with inflation ticking lower. Nevertheless, the Fed is yet to achieve its recommended 2% inflation level, raising the prospects of another round of interest rate hikes. Focus shifts to Wednesday, where investors will want to see whether the Fed will hike interest rates and pencil in one more move before year-end.

The prospects of two more rate hikes before year-end should continue to send shockwaves as they come at a time when the economic situation has deteriorated significantly. Inflation concerns are starting to build up amid an uptick in fuel prices.

Likewise, borrowing costs have increased significantly, making it difficult for businesses and companies to access the cheap capital needed to support and accelerate economic activities. Tech stocks tend to perform poorly during aggressive interest rate hikes, which explain the Nasdaq 100 pullback.