What's News in Markets: Airline Buyouts, GameStop’s Week, the Race for AI
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What market context set up this week’s stock moves?
Hey, your money briefing listeners. I'm Francesca Fontana for The Wall Street Journal. Every week, I write a column for the journal called The Score. It's a look at the biggest stock moves of the week and the news that drove them. We've heard that a lot of you can't get enough of our markets coverage. So we're going to be trying something new and bringing you what's news in markets each Saturday for the next few weeks. Take a listen and let us know what you think. This week, we saw stocks take a bit of a breather after their big rally in November. But they didn't stall for too long. On Thursday, they continued their climb thanks to the big tech stocks that have powered the market throughout much of 2023.
Specifically, the news around the AI arms race. Don't worry, we'll get to that a little later.
Which airlines are merging and why did Alaska agree to buy Hawaiian Airlines?
First, I want to talk about airlines. Another new partnership is Taking Flight. Last Sunday, Alaska Air reached a deal to pay about $1 billion to buy rival Hawaiian airlines. These names probably ring a bell, especially for any frequent flyers in the western half of the US. And these two, Alaska and Hawaiian, they're rivals, given that they both largely serve the same destinations around the Pacific and they offer competing flights to Hawaii. So the deal seems like a strategic move. Buying Hawaiian gives Alaska less competition and more scale and reach. If the deal goes through, they'll continue operating as separate brands, so you'll still be able to book a Hawaiian flight. That is, if they can get the okay from the DOJ.
Hawaiian shares really took off on the news.
How did the Alaska–Hawaiian deal affect each airline’s stock performance?
They jumped 192% on Monday. And the stock managed to hold on to the lion's share of those gains throughout the week. Alaska's stock went in the opposite direction. It lost 14% on Monday, but on Tuesday it rebounded a bit, and it made some smaller moves throughout the week. This week was a slower one for earnings, but one report I was watching was GameStop. Yes, GameStop. The video game retailer, shopping mall mainstay, and original meme stock. For anyone who's brand new to markets, meme stocks are kind of what they sound like.
What did GameStop’s quarterly report reveal and why does it still matter?
They're ones that have gained sudden viral popularity on the internet, and GameStop is their poster child. Now, GameStop's current market value is only a fraction of what it was at the 2021 peak. The stock is down some 20% this year, and it didn't seem like GameStop's report was going to do it any favors on Wednesday. The company said sales dropped 9%, though it also cut costs and narrowed its loss. But what investors and analysts really seemed to pay attention to was the company's new investment policy, which will allow GameStop to use its cash to invest in stocks. Chairman and CEO Ryan Cohen will have the authority to manage that investment portfolio.
Why did GameStop’s new investment policy move investors this week?
As for investor sentiment, GameStop shares gained 10% Thursday. Not quite a meme-level rally, but nothing to sneeze at, that's for sure.
And at last, let's talk about the AI arms race. As you previously heard on What's News, Google announced its new AI system, Gemini, this week. It said Gemini is more powerful than any other system currently on the market, including tech developed by chat GPT creator OpenAI. In reaction, Alphabet, Google's parent company, saw its shares gain 5.3% Thursday, leading the broader market higher.
How are Google and AMD intensifying the AI arms race and what were the market reactions?
The stock gave back some of those gains Friday, but it's still up around 50% this year, outpacing the Nasdaq. Now, we're all paying attention to Alphabet and OpenAI and Microsoft and all of the companies that are pioneering these AI systems. But we can't forget about the huge impact that AI demand is having on chipmakers, like Advanced Micro Devices, also known as AMD. And this week, AMD launched its newest chips for AI. It's a direct challenge aimed at NVIDIA, the current leader in that market. AMD's shares ended 1.3% lower on Wednesday, but jumped nearly 10% Thursday, as investors digested the news. So watch out, NVIDIA. AMD is coming for your crown. And now you know what's news in markets this week.
If you like what you hear, or even if you don't, let us know.
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Chapters
6 chapters
1
What market context set up this week’s stock moves?
0:04–0:48
2
Which airlines are merging and why did Alaska agree to buy Hawaiian Airlines?
0:48–1:33
3
How did the Alaska–Hawaiian deal affect each airline’s stock performance?
1:33–2:07
4
What did GameStop’s quarterly report reveal and why does it still matter?
2:07–2:44
5
Why did GameStop’s new investment policy move investors this week?
2:44–3:23
6
How are Google and AMD intensifying the AI arms race and what were the market reactions?
3:23–4:30
Speakers
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