CNBC Daily Open: Amazon enters $2 trillion club

This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

Clinging on 
The S&P 500 and the Dow Jones Industrial Average just about finished the session in positive territory. The Nasdaq Composite, on course for an 18.6% gain in the first six months of the year, rose 0.49%. After trading mostly in negative territory, Nvidia made a small gain following the previous session’s 7% surge. The yield on the 10-year Treasury rose as investors parse comments from Fed officials and await key inflation data due Friday. U.S. oil prices rose amid escalating tensions in the Middle East. 

$2,000,000,000,000
Amazon‘s market capitalization surpassed $2 trillion for the first time on Wednesday, joining the ranks of tech giants like Apple and Microsoft. The surge in megacap tech stocks has been driven by investor excitement around generative AI. Amazon’s stock has risen 26% this year, outpacing the Nasdaq’s 18% increase. The stock rose 3.9% on Wednesday. Separately, CNBC’s Annie Palmer reports Amazon plans to launch a discount store in bid to fend off Temu and Shein. 

Southwest cuts guidance
Southwest Airlines cut its second-quarter revenue forecast due to difficulties adapting its revenue management to recent booking trends. Despite the revised outlook, the airline still expects record quarterly operating revenue. Activist investor Elliott Management reiterated calls for leadership changes, “Southwest is led by a team that has proven unable to adapt to the modern airline industry.” Higher costs and increased capacity have impacted fares and profits across the industry, while competitors like Delta and United have benefited from the return of international travel. Southwest shares fell 4% before recovering to end the session just 0.2% lower.

Micron slides 
Shares of Micron fell almost 8% in extended trading on Wednesday as its revenue forecast failed to top analysts’ expectations. The computer memory and storage maker expects revenue of $7.6 billion in the current quarter, in line with estimates. Micron’s shares have doubled in the past year as its most advanced memory is needed for AI graphics processing units. CEO Sanjay Mehrotra said the company’s AI-oriented products were likely to increase in price and its data center business grew 50% on a quarter-to-quarter basis. 

YouTube dominance
Alphabet‘s YouTube, the pioneer of user-generated content, continues to dominate media consumption, now accounting for nearly 10% of all TV viewership in the U.S. According to Nielsen, Netflix ranked second, claiming 7.6% of viewership. “We’re not talking about your mobile phone, your laptop … but on the biggest screen in the house, the TV,” said LightShed media analyst Rich Greenfield. “Every [media] executive has to be paying attention.” Media companies such as Netflix, Disney and Warner Bros. Discovery don’t have a uniform strategy to deal with the threat.

[PRO] Summer correction
Piper Sandler’s chief market technician warns of a 10% S&P 500 correction this summer. Investors are ignoring red flags like poor market breadth and waning momentum, setting the stage for a potential tumble.

There was a surge of activity in the auto industry that may have been overshadowed by Volkswagen’s $5 billion investment in the loss-making EV maker Rivian. While VW makes solid cars, its electric vehicles are plagued with glitchy software. As CNBC’s Sophie Kiderlin notes this investment will take years to yield returns. Analysts, however, are wary of the current “EV winter” marked by tepid demand and increased competition. Despite these challenges, Rivian’s stock surged 23%, reflecting investor optimism.

Elsewhere in the industry, Waymo, Alphabet’s self-driving car unit, expanded its robotaxi service to all users in San Francisco. Meanwhile, General Motors‘s Cruise autonomous vehicle division appointed former Amazon and Microsoft executive Marc Whitten as its new CEO. This leadership change follows a series of collisions that led to investigations and the suspension of Cruise’s license in California, heightening public skepticism about driverless technology.

While Waymo is steadily rolling out its services and Cruise is restarting its operations, Tesla has yet to introduce its long-promised robotaxi. Elon Musk’s projections for a 2020 launch and fully autonomous driving by 2018 have yet to materialize. Nevertheless, Musk envisions Tesla as a potential $7 trillion robotaxi enterprise. The unveiling of Tesla’s robotaxi on Aug. 8 will be closely watched to gauge its competitive edge.

Rivian shareholder Amazon joined the exclusive $2 trillion market cap club, alongside Alphabet, Nvidia, Apple and Microsoft. This milestone comes as Amazon aggressively cuts costs.

While enthusiasm for AI remains high, Wall Street experienced a more measured session as investors sought to lock in profits from the Nvidia-driven surge. Despite the current optimism, strategists caution that the S&P 500 might face a correction over the summer. CNBC’s Sarah Min explores the factors behind Citi’s projections and a series of recent upgrades.

— CNBC’s Hakyung Kim, Brian Evans, Alex Sherman, Samantha Subin, Annie Palmer, Ece Yildirim, Michael Wayland, Sophie Kiderlin, Spencer Kimball, Leslie Josephs and Sara Min contributed to this report.