Markets
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Luke Kawa

Will Corporate America’s AI adoption justify the massive capital spending?

We don’t seem to live in a world where AI capex for capex’s sake is rewarded by investors anymore. Investors likely need to see increasing downstream adoption — that is, AI being used more and more in the field.

One problem with this is that surveys on Corporate America’s utilization of AI are all over the map; I’ve seen some in the low double digits and others in the neighborhood of 60% or more.

AI capex is both offensive — a bid to create new revenue streams and enable products that don’t exist — but also defensive, made by tech behemoths trying to ensure their existing dominant positions don’t get swept away by the tide of this new technology.

In many cases, Fortune 500 companies that want to implement — or, at least, dip their toe in the AI waters — don’t have a preestablished strategy or plan of action to do so. They need outside help for that.

Some good proxies for Corporate America’s willingness to spend on AI, therefore, can be found through consulting giant Accenture’s new bookings as well as IBM’s generative-AI book of business.

Accenture is in the business of helping companies “reinvent” themselves, a process that the consulting giant itself has had to undergo in light of how the industry has been rattled by the emergence of AI. And to do that, it’s turned to… AI, overhauling its work force, striking partnerships with OpenAI, Anthropic, Snowflake, and Palantir, and also buying a majority stake in DLB Associates, an AI data center engineering and consulting firm.

“We are expanding in these partnerships because of what we see in client demand,” CEO Julie Sweet said during Accenture’s December 18 earnings call. “We really try to be number one with all of the partners so that we can help our clients integrate and use these new technologies with their existing ecosystem, which is absolutely critical to them.”

Annoyingly, Accenture has decided that it won’t be breaking out AI-specific financial performance going forward, but that’s also a signal of how much management thinks this is integral to its overall growth.

And for IBM, AI-related consulting feeds through to other parts of its business, as its AI book of business also includes associated software revenues.

“Definitely the AI piece is a strong contributor to the software growth and I believe it’s a big piece of why consulting is beginning to return to growth, because we called the play to move toward AI almost two years ago,” IBM CEO Arvind Krishna said on the company’s most recent earnings call.

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Matt Phillips

Nasdaq Composite enters correction territory, joining small-cap Russell 2000

The Nasdaq Composite closed down 10.9% from its high of 24,019.99 — reached during intraday trading on October 29 — putting the tech-heavy benchmark conclusively into a “correction.”

A correction is Wall Street’s term of art for a sell-off that’s graver than a garden-variety slump, but not quite as dire as a bear market. (A bear market commences when prices are down 20% from a peak.)

While the proximate cause in the Nasdaq turndown seems to be the war — the Composite is down more than 5% since the start of the conflict on February 28 — it’s worth noting that the index had been stalled out for three months prior to that.

At least Nasdaq investors aren’t alone: the small-cap Russell 2000 slipped into a correction last Friday. The S&P 500 has held up better, relatively speaking, though it, too, is down more than 7% from its intraday high of 7,002.28, which it touched on January 28.

Bear on Back Feet

Markets sell off as Mideast conflict shows no sign of ending

The S&P 500, Nasdaq 100, and Russell 2000 all fell while oil rose.

Toby Bochan9h
markets
Max Knoblauch

Hertz and Avis Budget appear to be benefiting as travelers balk at airport wait times

As the Department of Homeland Security shutdown drags on, resulting in some excruciating airport wait times, rental car companies Avis and Hertz are seeing a boost.

Both companies are up more than 10% on Thursday, continuing a weeklong trend of trading momentum. From market close on March 20 to midday Thursday, Avis shares are up about 44%, while Hertz shares are up 24%.

Would-be flyers may be pivoting from sky to highway, even as gas prices climb. According to TravelPulse, search traffic for Hertz is up 15% in recent days.

The TSA is experiencing the longest wait times in its 24-year history, officials have said. Airfares rising as jet fuel prices remain elevated is likely adding to travelers’ decision.

Hertz Reports Spike in Car Rental Searches as US Airports Deal With Long TSA Lines

Hertz Reports Spike in Car Rental Searches as US Airports Deal With Long TSA Lines

Would-be flyers may be pivoting from sky to highway, even as gas prices climb. According to TravelPulse, search traffic for Hertz is up 15% in recent days.

The TSA is experiencing the longest wait times in its 24-year history, officials have said. Airfares rising as jet fuel prices remain elevated is likely adding to travelers’ decision.

markets
Saleah Blancaflor

US gas prices increase $1 in 1 month as markets expect $4 per gallon in coming days

As gas demand remains on the rise in the midst of spring break season and crude oil prices rise as hopes the Iran war will draw down decrease, gas prices have steadily risen.

According to the American Automobile Association, the national average price for a gallon of regular gas is up $0.10 from the previous week and up $1 since last month. AAA reports that there was a steep rise from $2.98 on February 26 to $3.98 as of March 26.

AAA said that average gas prices could hit $4 per gallon in the next few days, which would mark the first time since August 2022 that they’ve hit that level.

According to the Energy Information Administration, demand for gas rose last week from 8.72 million barrels per day to 8.92 million. The data also shows that domestic gas supply fell from 244 million barrels to 241.4 million. Meanwhile, gas production grew last week, averaging 9.7 million barrels per day.

Prediction markets show traders pricing in a 61% chance the price of gas could surpass $4 by the end of the month. As AAA projects that gas prices could continue to rise in the next few weeks, markets also imply there’s a 42% and 40% chance gas could finish roughly around $4.02 or $4.04 per gallon, respectively, by March 31.

(Event contracts are offered through Robinhood Derivatives, LLC — probabilities referenced or sourced from KalshiEx LLC or ForecastEx LLC.)

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National gas prices increase one dollar in one month

AAA Fuel Prices

AAA said that average gas prices could hit $4 per gallon in the next few days, which would mark the first time since August 2022 that they’ve hit that level.

According to the Energy Information Administration, demand for gas rose last week from 8.72 million barrels per day to 8.92 million. The data also shows that domestic gas supply fell from 244 million barrels to 241.4 million. Meanwhile, gas production grew last week, averaging 9.7 million barrels per day.

Prediction markets show traders pricing in a 61% chance the price of gas could surpass $4 by the end of the month. As AAA projects that gas prices could continue to rise in the next few weeks, markets also imply there’s a 42% and 40% chance gas could finish roughly around $4.02 or $4.04 per gallon, respectively, by March 31.

(Event contracts are offered through Robinhood Derivatives, LLC — probabilities referenced or sourced from KalshiEx LLC or ForecastEx LLC.)

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Max Knoblauch

Ethanol players climb following the Trump administration’s move to waive summer gas regulations

Ethanol-exposed companies are climbing on Thursday, following the Trump administration’s move yesterday to waive summertime limitations on the sale of E15 gas, a blend of fuel containing 15% ethanol.

Sale of the higher-ethanol blend is limited in about half of the US over the summer months to lessen smog. Including this year, those limitations have been waived for five summers in a row. According to Axios reporting, E15 typically costs about $0.10 to $0.40 less per gallon while delivering slightly lower fuel economy.

Ethanol companies are climbing on the decision, with Rex American Resources up more than 5%, Green Plains up 3%, and Gevo up about 2%. Rex and Gevo also closed higher on Wednesday.

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