Amazon joins the $2 trillion club

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Clinging to
The S&P 500 and Dow Jones Industrial Average ended the session almost in the black. The Nasdaq Composite, which has gained 18.6% in the first six months of the year, rose 0.49%. After trading mostly in the red, Nvidia managed to post a small gain after the previous session’s 7% rise. The yield on the 10-year U.S. Treasury note rose as investors analyzed comments from Fed officials and awaited key inflation data expected on Friday. U.S. oil prices rose amid escalating tensions in the Middle East.

$2,000,000,000,000
Amazon’s market cap crossed the $2 trillion mark for the first time on Wednesday, joining the ranks of tech giants like Apple and Microsoft. The rise in megacap tech stocks has been fueled by investor enthusiasm for generative AI. Amazon stock has risen 26% this year, outpacing the Nasdaq’s 18% gain. On Wednesday, the stock rose 3.9%. Separately, CNBC’s Annie Palmer reports that Amazon plans to open a discount retailer to compete against Temu and Shein.

Southwest lowers forecast
Southwest Airlines has cut its second-quarter revenue forecast, citing difficulties in adjusting revenue management to recent booking trends. Despite the revised forecast, the airline still expects record revenue in the quarter. Activist investor Elliott Management reiterated calls for a change in leadership: “Southwest is led by a team that has proven incapable of adapting to the modern airline industry.” Higher costs and increased capacity have impacted fares and profits across the industry, while rivals such as 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-scale slides
Micron shares fell nearly 8% in extended trading on Wednesday as its revenue forecast fell short of analysts’ expectations. The computer memory and storage maker expects revenue of $7.6 billion in the current quarter, in line with estimates. Micron shares have doubled in the past year as the company’s most advanced memory is needed for graphics processors used in artificial intelligence. CEO Sanjay Mehrotra said the company’s AI-focused products are likely to rise in price and its data center business grew 50% from the previous quarter.

YouTube dominance
Alphabet’s YouTube, the pioneer of user-generated content, continues to dominate media consumption, now accounting for nearly 10% of all television viewers in the U.S. According to Nielsen, Netflix comes in second with 7.6% of viewers. “We’re not talking about your mobile phone, your laptop… we’re talking about the biggest screen in the house, the TV,” said Rich Greenfield, media analyst at LightShed. “Every (media) manager needs to pay attention to this.” Media companies like Netflix, Disney and Warner Bros. Discovery have no unified strategy for dealing with the threat.

(PRO) Summer correction
Piper Sandler’s chief market technician warns of a 10% correction in the S&P 500 this summer. Investors are ignoring warning signals such as low market breadth and weakening momentum, paving the way for a possible crash.

There was a burst of activity in the auto industry, which may have been overshadowed by Volkswagen’s $5 billion investment in loss-making electric car maker Rivian. VW builds solid cars, but its electric vehicles suffer from buggy software. As CNBC’s Sophie Kiderlin notes, it will take years for that investment to turn a profit. But analysts are concerned about the current “electric car winter,” characterized by muted demand and increased competition. Despite these challenges, Rivian’s stock rose 23%, reflecting investor optimism.

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

While Waymo is gradually expanding its services and Cruise is resuming operations, Tesla has yet to unveil its long-promised robotaxi. Elon Musk’s predictions of a 2020 launch and fully autonomous driving by 2018 have not yet materialized. Still, Musk sees Tesla as a potential $7 trillion robotaxi company. The unveiling of Tesla’s robotaxi on August 8 will be closely watched to assess its competitive advantage.

Rivian shareholder Amazon has 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 dovish session as investors sought to lock in profits from the Nvidia-fueled rally. Despite the current optimism, strategists warn the S&P 500 could see a correction over the summer. CNBC’s Sarah Min examines the factors behind Citi’s forecasts 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.