Arm Announces Nasdaq IPO, Microsoft Adjusts Activision Merger – Market Developments

In a significant market update, chip designer Arm has unveiled plans for an eagerly anticipated initial public offering (IPO), while Microsoft has made alterations to its ambitious merger with Activision Blizzard to address concerns from UK regulators. Meanwhile, tech stocks show resilience despite surging bond yields and excitement builds around Nvidia’s upcoming earnings report.

1. Arm’s Nasdaq IPO Prospectus Revealed

Arm, the chip designer owned by Softbank, has released its preliminary prospectus for an IPO on the Nasdaq, marking a significant step towards one of the largest US public offerings in almost two years. As the demand for generative artificial intelligence grows, Softbank aims to capitalize on this trend with Arm’s processor designs integrated into chips by tech giants such as Apple and Nvidia. While the valuation and the number of shares to be issued remain undisclosed, Arm’s filing emphasizes its global reach, noting its products are used by approximately 70% of the world’s population. The IPO could potentially value Arm as high as $64 billion, making it the most valuable business to IPO in the US since 2021.

2. Tech Futures Rise Despite Bond Yield Surge

US stock futures show resilience as tech stocks resist the impact of surging bond yields. The Dow, S&P 500, and Nasdaq 100 futures have all risen, with the Nasdaq Composite notably achieving its highest gain this month. Although concerns over elevated interest rates led to a spike in bond yields, tech stocks, including Nvidia, remain strong due to positive sentiment around their upcoming earnings report. The anticipation of Federal Reserve Chair Jerome Powell’s remarks at the Jackson Hole symposium adds to the current market dynamics.

3. Microsoft’s Altered Merger Proposal with Activision

Microsoft has submitted a revised merger proposal with Activision Blizzard to address concerns from UK competition authorities. The adjusted deal includes the sale of cloud streaming rights outside the European Economic Area to French competitor Ubisoft. The restructuring aims to gain approval for the $69 billion merger after the UK’s Competition and Markets Authority (CMA) raised concerns over innovation in the cloud gaming market. While Microsoft asserts the substantial differences in the new proposal, the CMA maintains a cautious approach and will thoroughly assess the deal’s implications.

4. Earnings Reports from Lowe’s and Macy’s

Retail giants Lowe’s and Macy’s are poised to release their quarterly results, providing insights into consumer spending trends. Lowe’s, despite a near-term slowdown in expenditures on home improvement items, emphasizes its medium- and long-term business strength. Macy’s, however, has revised its sales and income forecast due to a spring slowdown in shopper spending. Both companies navigate an uncertain economic landscape marked by fluctuating inflation rates.

5. Oil Prices Hold Steady Ahead of US Inventory Data

Oil prices remain stable as market participants evaluate China’s economic recovery and anticipate US monetary policy signals from the Jackson Hole symposium. Concerns emerge over China’s ability to support its post-pandemic recovery, potentially affecting oil demand. US crude oil and gasoline inventory data from the American Petroleum Institute and the Energy Information Administration are awaited, contributing to market sentiment.

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