By Noel Randewich and Ankika Biswas

(Reuters) – Wall Street stocks ended lower on Tuesday as Oracle shares tumbled more than 13% after a weak forecast and surging oil prices deepened worries about persistent price pressures ahead of crucial inflation readings this week.

Oracle shares dived to their lowest since June after the cloud-services provider forecast current-quarter revenue below targets and narrowly missed first-quarter expectations.

Cloud-computing heavyweights Amazon.com and Microsoft each fell more than 1%, pressured by Oracle’s weak forecast and by a rise in U.S. Treasury yields.

Oil prices jumped more than 1%, building on a recent rally and stoking worries that sticky inflation could mean U.S. interest rates stay higher longer in the aftermath of strong economic data.

“People are a little bit worried about energy prices picking up pretty aggressively in recent weeks and that creates some concerns as we look forward to November” when some investors worry Federal Reserve policy makers may raise rates again, said Thomas Hayes, chairman at Great Hill Capital LLC.

Investors are awaiting August consumer price index data due on Wednesday and producer prices reading scheduled for Thursday to gauge the outlook for U.S. interest rates ahead of the Fed’s meeting on Sept. 20.

Interest rate traders see a 93% chance of rates remaining at the current levels in September but just a 56% likelihood of a pause at the November meeting, according to the CME FedWatch Tool.

“All the all the inputs that we get between now and the November meeting will be important, especially those related to inflation. So that thrusts a lot of importance on tomorrow’s CPI report,” said Art Hogan, chief market strategist at B Riley Wealth.

Investors will also monitor the European Central Bank’s policy decision on Thursday, when it is seen holding rates after nine consecutive hikes.

Apple dropped 1.8% after unveiling new iPhones, while not increasing prices as it faces a global smartphone slump. The stock was also hurt by a report that China’s Huawei Technologies has raised the second-half shipment target for its Mate 60 series smartphone by 20%.

The S&P 500 declined 0.57% to end the session at 4,461.91 points.

The Nasdaq declined 1.04% to 13,773.62 points, while Dow Jones Industrial Average declined 0.05% to 34,645.99 points.

Of the 11 S&P 500 sector indexes, eight declined, led lower by information technology, down 1.75%, followed by a 1.06% loss in communication services. The energy index added 2.31%.

Volume on U.S. exchanges was relatively light, with 9.4 billion shares traded, compared to an average of 9.9 billion shares over the previous 20 sessions.

The most traded stock in the S&P 500 was Tesla, with $36.7 billion worth of shares exchanged during the session. The electric car maker declined 2.23%.

WestRock jumped 2.8% after agreeing to merge with Europe’s Smurfit Kappa to create the world’s largest listed paper and packaging company, worth nearly $20 billion.

Advance Auto Parts dropped about 8% after S&P Global downgraded the auto parts retailer’s credit and debt ratings from investment grade (BBB-) to junk (BB+).

Zions Bancorp jumped 6.8% after the U.S. regional lender posted a slight increase in its monthly net interest income growth.

Declining stocks outnumbered rising ones within the S&P 500 by a 1.4-to-one ratio.

The S&P 500 posted 12 new highs and 14 new lows; the Nasdaq recorded 48 new highs and 184 new lows.

(Reporting by Ankika Biswas and Shristi Achar A in Bengaluru, and by Noel Randewich in Oakland, Calif.; Editing by Arun Koyyur, Vinay Dwivedi and David Gregorio)

By Noel Randewich and Ankika Biswas

(Reuters) – The S&P 500 and Nasdaq fell on Tuesday as a jump in oil prices deepened worries about persistent price pressures ahead of crucial inflation readings this week, while Oracle slumped after its downbeat forecast and results.

Oil prices jumped more than 1%, building on a recent rally and stoking worries that sticky inflation could mean U.S. interest rates stay higher longer in the aftermath of strong economic data.

“People are a little bit worried about energy prices picking up pretty aggressively in recent weeks and that creates some concerns as we look forward to November” when some investors worry Federal Reserve policy makers may raise rates again, said Thomas Hayes, chairman at Great Hill Capital LLC.

Investors are awaiting August consumer price index data due on Wednesday and producer prices reading scheduled for Thursday to gauge the outlook for U.S. interest rates ahead of the Fed’s meeting on Sept. 20.

Interest rate traders see a 93% chance of rates remaining at the current levels in September but just a 56% likelihood of a pause at the November meeting, according to the CME FedWatch Tool.

“All the all the inputs that we get between now and the November meeting will be important, especially those related to inflation. So that thrusts a lot of importance on tomorrow’s CPI report,” said Art Hogan, chief market strategist at B Riley Wealth.

Investors will also monitor the European Central Bank’s policy decision on Thursday, when it is seen holding rates after nine consecutive hikes.

Cloud-services provider Oracle dropped 14% to its lowest intra-day level in three months, after forecasting current-quarter revenue below targets and narrowly missing first-quarter expectations.

Cloud-computing heavyweights Amazon.com and Microsoft fell by about 1%, pressured by Oracle’s weak forecast and by a rise in U.S. Treasury yields.

While higher oil prices fanned inflation fears, they lifted energy stocks by 1.3% to lead gains among major S&P 500 sector indexes. [O/R]

Apple was down 1.4%, hurt by a report that China’s Huawei Technologies has raised the second-half shipment target for its Mate 60 series smartphone by 20%.

Also, Apple unveiled a new iPhone on Tuesday amid uncertainty about market access in China and intensifying competition.

The S&P 500 was down 0.25% at 4,476.45 points.

The Nasdaq declined 0.64% to 13,828.41 points, while the Dow Jones Industrial Average was up 0.30% at 34,767.56 points.

The most traded stock in the S&P 500 was Tesla Inc, with $28.3 billion worth of shares exchanged during the session. The electric car maker’s shares declined 1.67%.

WestRock jumped 3.7% on agreeing to merge with Europe’s Smurfit Kappa to create the world’s largest listed paper and packaging company, worth nearly $20 billion.

Advance Auto Parts lost 5.7% after S&P Global downgraded the auto parts retailer’s credit and debt ratings from investment grade (BBB-) to junk (BB+).

Zions Bancorp jumped 7.5% after the U.S. regional lender posted a slight increase in its monthly net interest income growth.

Advancing issues outnumbered falling ones within the S&P 500 by a 1.2-to-one ratio.

The S&P 500 posted 12 new highs and 14 new lows; the Nasdaq recorded 43 new highs and 161 new lows.

(Reporting by Ankika Biswas and Shristi Achar A in Bengaluru, and by Noel Randewich in Oakland, Calif.; Editing by Arun Koyyur, Vinay Dwivedi and David Gregorio)

By Stephen Nellis

CUPERTINO, California (Reuters) – Apple on Tuesday unveiled a new iPhone 15 with a brighter display and a 48-megapixel camera as well as 100% recycled cobalt in its battery, amid a global smartphone slump and problems with sales in China.

The event at Apple’s Cupertino, California, headquarters comes amid lingering economic uncertainty, especially in China, Apple’s third-largest market where it faces challenges from expanded restrictions on using its iPhones in government offices and the first new flagship phone in several years from Huawei Technologies.

Apple also showed off a new Series 9 Watch with a feature called “double tap” where users tap thumb and finger together twice, without touching the watch, in order to perform tasks like answering a phone call.

It uses machine learning to detect tiny changes in blood flow when the user taps their fingers together, freeing up the other hand for other tasks like walking a dog or holding a cup of coffee, said Apple Chief Operating Officer Jeff Williams.

The Apple Watch Ultra 2 has new features for cycling and diving and what Apple said is the brightest screen it has ever made.

Apple will no longer use leather in any of its products, said Lisa Jackson, the company’s environmental chief. The company is replacing some of those products with a textile called “FineWoven” that it says feel like suede.

CEO Tim Cook also said Apple is “on track” to ship its Vision Pro mixed-reality headset early next year.

While Apple is introducing new features and products, the iPhone made up more than half of Apple’s $394.3 billion in sales last year.

The global smartphone market has slumped from shipping 294.5 million total phones to 268 million in the second quarter, but Apple’s shipments declined the least of any major smartphone maker, dropping from 46.5 million phones to 45.3 million, according to data from Counterpoint Research.

“The truth of the matter is, we’re in a very down smartphone market,” said Bob O’Donnell, head of TECHnalysis Research.

O’Donnell said he will also be on the lookout for any hints about Apple’s plans with what is known as generative artificial intelligence, the technology trend behind applications like OpenAI’s ChatGPT and Microsoft’s “Copilot” assistant technologies for its Office software.

Analysts have repeatedly prodded Apple about its plans for such technology but the company has given few hints so far, other than Chief Executive Tim Cook’s comments in July that the company’s secret work on the technology is driving up its research spending.

“Will Apple tease an advanced form of Siri? That would be something that would generate some excitement,” O’Donnell said.

(Reporting by Stephen Nellis in Cupertino, California; Additional reporting by Aditya Soni, Pushkala Aripaka, Raechel Thankam Job and Yuvraj Malik in Bengaluru; Editing by Peter Henderson and Lisa Shumaker)

Amazon Joins Microsoft, Investing in Technology For Decarbonization

Amazon has affirmed its commitment to helping reduce carbon in the atmosphere in the race to combat global warming. The e-commerce giant is funding the world’s largest direct air capture (DAC) technology deployment used in sucking CO₂ from the atmosphere. The company will purchase a quarter of a million metric tons of carbon removal over the next decade from the first plant developed by carbon removal Technology Company 1PointFive.

Amazon Decarbonization Push

The carbon that is to be removed by the direct air capture technology is to be stored underground in saline aquifers, which are large rock formations. A quarter of a million metric tons of the saline aquifers with CO₂ will be equivalent to the emissions in one year from 55,633 fossil fuel cars. The investment in DAC technology is part of Amazon’s bid to reduce CO₂ in the atmosphere.

The tech giant has been investing millions of dollars as it looks to play a key role in combating greenhouse emissions. Its Climate Pledge Fund has invested in climate tech firm CarbonCapture Inc. That is helping accelerate the commercial deployment of new DAC materials that absorb carbon from the atmosphere.

With the two investments, the company is now positioned to target emissions that cannot be eliminated from the source. The investments also position the company to help develop technologies that should help avert the worst effects of global climate change.

In addition to helping reduce CO₂ in the atmosphere, the tech giant is also decarbonizing its operations to ensure it limits CO₂ emissions from its operations. It’s been investing in and adopting renewable energy sources, from solar to wind, to power its operations. The company has also started relying on electric cars for its delivery fleet in the race to reduce CO₂ emissions from its operations.

Microsoft Carbon Credits

It Joins Microsoft, which has also invested millions of dollars in the race to combat carbon emissions. The software giant has already reached an agreement to purchase carbon credits from California-based Heirloom Carbon. The company uses limestone to remove carbon from the atmosphere instead of using DAC technology.

Microsoft is on course to remove up to 315,200 metric tons of carbon dioxide over the next decade by purchasing carbon credits. The removal is poised to offset the carbon emitted by at least 70,000 gas-powered cars. Heirloom’s has already attracted an investment of up to $600 million from the Department of Energy to help in the decarbonization spree.

Even as Amazon and Microsoft make huge leaps in the removal of CO₂ from the atmosphere, scientists insist there is still some work to be done to bring the situation under control and slow down climate change. Removing about 1 trillion tons of carbon dioxide from the atmosphere is needed to keep global warming below 1.5 degrees.

Therefore, new and better technologies are needed to help reduce the CO₂ in the atmosphere that has been fuelling global warming. To solve the problem, new innovation and invention of technologies that don’t exist is highly needed.

By Diane Bartz

WASHINGTON (Reuters) – Adobe, IBM, Nvidia and five other firms have signed President Joe Biden’s voluntary commitments governing artificial intelligence, which requires steps such as watermarking AI-generated content, the White House said.

The original commitments, which were announced in July, were aimed at ensuring that AI’s considerable power was not used for destructive purposes. Google, OpenAI and OpenAI partner Microsoft signed onto the commitments in July.

“The president has been clear: harness the benefits of AI, manage the risks, and move fast – very fast,” White House chief of staff Jeff Zients said in a statement. “And we are doing just that by partnering with the private sector and pulling every lever we have to get this done.”

The other five companies signing on to the commitments are Palantir, Stability, Salesforce, Scale AI and Cohere.

The step is seen as a stopgap given that Congress has held discussions on potential AI legislation but little has been introduced and nothing significant has become law.

(This story has been officially corrected to change the company name to ‘Scale AI’, not ‘Scale’)

(Reporting by Diane Bartz; Editing by Sam Holmes)

By Rajesh Kumar Singh, Abhijith Ganapavaram and Valerie Insinna

(Reuters) -Aerospace suppliers and airlines around the world warned of rising costs and a squeeze on plane capacity after U.S. engine maker RTX disclosed that a rare manufacturing flaw could ground hundreds of Airbus jets in coming years.

The problem, a rare powder metal defect that can lead to cracks in some engine components, is the latest trouble for the industry, which has been grappling with shortages of staff and supply-chain woes even as travel rebounded from pandemic lows.

RTX said on Monday it would have to pull 600 to 700 of its Pratt & Whitney Geared Turbofan (GTF) engines from Airbus A320neo jets for quality inspections over the next three years.

The beleaguered supplier’s shares fell 4.6% to a more than two-year low of $73.66 on Tuesday, but it drew backing from Airbus CEO Guillaume Faury who said at an event in Washington D.C. that the repairs were necessary to ensure safety.

“We don’t like the situation, but we think that was the right thing to do,” he said, adding that the problems are “very unfortunate.” Airbus said on Monday it does not expect an effect on its 2023 deliveries. Its shares were down 2.4% in Paris on Tuesday.

The engine issue was first disclosed in July, but RTX made the extent of the problem clearer on Monday.

The announcement caused waves up and down the industry, from component manufacturers like Japan’s Kawasaki Heavy Industries to airline carriers like Germany’s Lufthansa that rely on the popular Airbus jets.

The problem may worsen a tug-of-war over engines between airplane factories and repair shops, industry sources told Reuters, as repairs take longer to fix.

The snag could ground an average of 350 jets a year through 2026, with as many as 650 jets sitting idle in the first half of 2024. RTX initially estimated repair work per engine to last 60 days, but it is now expected to take up to 300 days.

In July, RTX said microscopic contaminants were found in a powdered metal used in high-pressure turbine discs that are part of the GTF engine’s core. The presence of those contaminants could lead to cracks in the engine.

Replacing the discs requires removing the engine, disassembling and reassembling it. The engines affected were made between 2015 and 2021.

Shares of RTX, which was formed from the merger of Raytheon and United Technologies in 2020, have lost a quarter of their value since disclosing the problem in July.

“When the company initially identified the powder metal issue with the GTF engine, we had confidence that the issue, based on the data provided, was relatively well contained,” said RBC Capital Markets analyst Ken Herbert in a note.

“The financial and operational impact identified is more substantial than we had expected.”

AIRLINES, MANUFACTURERS DETAIL HIT

Aerospace suppliers with a stake in the troubled engine program said the issue would affect their costs. London-listed aerospace component maker Melrose Industries said it faces a potential hit of around 200 million pounds ($249.2 million).

Japan’s IHI and Kawasaki Heavy Industries said they expect an earnings hit from the lengthy inspections, while German firm MTU Aero Engines warned of lower profits on Monday.

Lufthansa said on Tuesday the snag will result in the German flag-carrier grounding 20 A320neos at any time.

Air New Zealand, which has 16 A320neo jets in its fleet, said on Tuesday the issue will further reduce engine availability and would have a “significant” impact on its flight schedule from January 2024.

Scoot, a unit of Singapore Airlines, said the inspections would affect four of the engines that power its A320neo fleet and could force it to adjust some of its flights.

On Monday, Hungarian carrier Wizz Air estimated a potential 10% capacity hit in the second half of fiscal 2024.

RTX is one of two manufacturers of engines for the popular narrowbody Airbus A320neo, the other being CFM International, a joint venture between GE and Safran.

($1 = 0.8026 pounds)

(Reporting by Valerie Insinna in Washington, Rajesh Kumar Singh in New Delhi, Abhijith Ganapavaram, Aniruddha Ghosh, Mehr Bedi in Bengaluru; Editing by David Gaffen and Arun Koyyur)

By Ankika Biswas and Shristi Achar A

(Reuters) -The S&P 500 and Nasdaq fell on Tuesday as a jump in oil prices deepened worries about persistent price pressures ahead of crucial inflation readings this week, while Oracle slumped on downbeat forecast and results.

Oil prices jumped more than 1% on Tuesday, building on a recent rally and stoking worries over sticky inflation in the aftermath of strong economic data, clouding the chances of an end to U.S. monetary policy tightening.

“People are a little bit worried about energy prices picking up pretty aggressively in recent weeks and that creates some concerns as we look forward to November,” said Thomas Hayes, chairman at Great Hill Capital LLC.

Investors now keenly await August consumer prices data due on Wednesday and producer prices reading scheduled for Thursday to gauge the outlook for U.S. interest rates ahead of the Federal Reserve’s monetary policy outcome on Sept. 20.

“If inflation keeps on increasing like this, which is what’s anticipated, the Fed might hold interest rates higher for longer,” said Michael Matousek, head trader at U.S. Global Investors Inc.

Traders still see a 93% chance of rates remaining at the current levels in September and a near 56% likelihood of a pause in November, as per the CME FedWatch Tool.

Investors will also monitor the European Central Bank’s policy decision on Thursday, where it is seen holding rates after nine consecutive hikes.

Weighing down the S&P 500, cloud-services provider Oracle dropped 11.3% to its lowest intra-day level in three months, after forecasting current-quarter revenue below targets and narrowly missing first-quarter expectations.

While higher oil prices fanned inflation fears, they lifted energy stocks by 2% to lead gains among major S&P 500 sector indexes. [O/R]

Megacaps Amazon.com, Microsoft and Meta platforms dropped between 1.3% and 1.6%, respectively, also pressured by a rise in U.S. Treasury yields.

Apple lost 1.4% on a report that China’s Huawei Technologies has raised the second-half shipment target for its Mate 60 series smartphone by 20%.

Investors also awaited new iPhone 15 lineup launch amid uncertainty over market access in China and intensifying competition.

At 11:37 a.m. ET, the Dow Jones Industrial Average was up 21.31 points, or 0.06%, at 34,685.03, the S&P 500 was down 15.17 points, or 0.34%, at 4,472.29, and the Nasdaq Composite was down 89.58 points, or 0.64%, at 13,828.31.

WestRock jumped 4.3% on agreeing to merge with Europe’s Smurfit Kappa to create the world’s largest listed paper and packaging company worth nearly $20 billion.

Advance Auto Parts lost 6.4% after S&P Global downgraded the auto parts retailer’s credit and debt ratings from investment grade (BBB-) to junk (BB+).

Zions Bancorp jumped 6.5% after the U.S. regional lender posted a slight increase in its monthly net interest income growth.

Advancing issues outnumbered decliners by a 1.05-to-1 ratio on the NYSE and by a 1.06-to-1 ratio on the Nasdaq.

The S&P index recorded 10 new 52-week highs and 13 new lows, while the Nasdaq recorded 32 new highs and 135 new lows.

(Reporting by Ankika Biswas and Shristi Achar A in Bengaluru; Editing by Arun Koyyur and Vinay Dwivedi)

By Steven Scheer

JERUSALEM (Reuters) -Israel’s central bank is pushing forward with plans to issue a digital shekel, citing the need to improve the country’s payment systems, but on Tuesday remained noncommittal on whether one would be launched.

The Bank of Israel in November 2021 stepped up its research and preparation for the possible issuance of a digital shekel to create a more efficient payments system after first considering issuing a central bank digital currency (CBDC) in late 2017.

“Whether or not we will issue a digital shekel is still an open question, as it is in most if not all other advanced economies,” Bank of Israel Governor Amir Yaron said at a conference on digital currencies.

“Either way, we remain committed to be at the frontier, and more than that, to support the effort of pushing the frontier, in our CBDC explorations, as well as in our efforts to modernize and advance our payment systems … and the financial system in general,” Yaron said.

Israel’s central bank has been experimenting with a digital shekel with its Hong Kong counterpart and the Bank for International Settlements. It said the so-called Sela project has proven the feasibility of a retail CBDC and “combines accessibility, competition and preventative cyber security, while retaining key advantages of physical cash.”

Yaron said that given a rapid digitalisation of the economy, working on a CBDC makes sense and noted that Israel has closed the gap with other countries, while stressing that if Israel opts for one, “it will provide at least as much privacy as digital means of payments” and maybe even a higher level.

Deputy Governor Andrew Abir said that for Israel, issuing a digital shekel would provide more competition in a financial system dominated by a few large banks and institutions.

“The CBDC can offer a level playing field on which new entrants can offer financial products,” he said.

Abir said a steep rise in interest rates in the past year demonstrated this need since commercial banks did not fully pass rate increases to the balances of their customers, while on their loans the transmission was full and immediate.

“And there has been an understandable backlash by the public,” Abir said, adding that a digital currency could benefit consumers.

“I believe central banks should return to examine the possibility (of) remunerated CBDCs – that is, for the central bank to pay interest CBDC directly to the end users who hold it, and enjoy the security provided by the central bank. This is a complicated topic with many implications, and we will need to consider them as the project progresses,” Abir said.

(Reporting by Steven Scheer; Editing by Alexander Smith and Mark Porter)

By Lewis Krauskopf

NEW YORK (Reuters) – Morgan Stanley equity strategists said on Monday that markets are in a “late cycle” environment, with healthcare stocks poised to benefit because they have both defensive and growth properties.

“We view this year as an extension of the late cycle period often experienced when the (Federal Reserve) is expected to pause or reverse its hawkish policy stance,” strategists led by Michael Wilson said in a research note.

Morgan Stanley noted that healthcare has underperformed; the S&P 500 health sector is down 2.5% year-to-date versus a 16.5% rise for the overall index.

But the bank’s strategists said they were “overweight” the sector, calling it a “late cycle outperformer given its defensive and growth properties.”

“Earnings revisions are turning higher for the cohort and valuation remains attractive,” the strategists wrote.

Overall, the strategists’ “late cycle playbook” included a “barbell” portfolio approach with defensive growth on one side and energy and industrials – two areas that tend to benefit in strong economies – on the other.

Separately, strategists at BofA Global Research said their US Regime Indicator officially switched to a “recovery” phase for the economy, with metrics such as inflation and GDP improving.

Previous recovery regimes have seen pro-cyclical areas such as financials fare well, while utilities and other defensive groups lagged, BofA said in a note on Sunday.

Meanwhile, the recovery phase has also seen value and higher risk stocks lead, BofA wrote.

“These would mark a reversal of 2023’s mega-cap growth leadership,” BofA said in the note.

(Reporting by Lewis Krauskopf; Editing by Ira Iosebashvili and Richard Chang)

By Diane Bartz and Trevor Hunnicutt

WASHINGTON (Reuters) -Adobe, IBM, Nvidia and five other firms have signed U.S. President Joe Biden’s voluntary commitments governing artificial intelligence (AI), which require steps such as watermarking AI-generated content, the White House said on Tuesday.

The original commitments, which were announced in July, were aimed at ensuring that AI’s power was not used for destructive purposes. Google, OpenAI and OpenAI partner Microsoft signed onto the commitments in July.

“The president has been clear: harness the benefits of AI, manage the risks, and move fast – very fast,” White House chief of staff Jeff Zients said in a statement. “And we are doing just that by partnering with the private sector and pulling every lever we have to get this done.”

The other five companies signing on to the commitments are Palantir, Stability, Salesforce, Scale and Cohere.

Several companies were expected to attend a White House meeting on the topic on Tuesday with Commerce Secretary Gina Raimondo and Zients.

The private commitments backed by the Biden administration are seen as a stopgap given that Congress has held discussions on potential AI legislation but little has been introduced and nothing significant has become law. The White House has also been working on an executive order on AI.

(Reporting by Diane Bartz and Trevor HunnicuttEditing by Sam Holmes and Mark Potter)