Before the Bell: AI Bots Get Schooled, and Google Goes After AI-Generated Music

Premarket action on Friday had the three major U.S. indexes trading lower again. The Dow Jones industrials were down 0.35%, the S&P 500 down 0.6% and the Nasdaq 1.14% lower.

All 11 market sectors closed lower again Thursday, with communications services (−2.8%) and utilities and technology (both −1.41%) posting the day’s largest losses. Consumer cyclicals (−0.21%) and consumer staples (−0.30%) gave up the least. The Dow closed 0.73% lower, the S&P 500 down 0.88% and the Nasdaq down 1.02%. Two-year Treasuries added two basis points to close at 4.48%, and 10-year notes rose by four basis points to close at 3.67%. Oil gained 2.54% and traded up by about 0.2% early Thursday morning at $80.04.

Thursday’s trading volume was below the five-day average. New York Stock Exchange losers led winners by 2,253 to 807, while Nasdaq decliners led advancers by about 2 to 1.

New claims for unemployment benefits for last week rose by 13,000 to 196,000, and continuing claims rose by 38,000 to 1.688 million. The total for new claims continues to indicate a tight labor market, irrespective of the job losses in technology.

The preliminary University of Michigan consumer sentiment index is due out after markets open Friday. Economists expect the index to improve from the final January reading of 64.9 to 66.0.

Among S&P 500 stocks, Monolithic Power Systems Inc. (NASDAQ: MPWR) added 10.24% Thursday after beating earnings and revenue estimates. The semiconductor and power equipment maker’s stock rose to a six-month high, after plunging to a 52-week low in mid-October. Monolithic also issued in-line guidance and raised its dividend payment.

International Flavors & Fragrances Inc. (NYSE: IFF) plunged by 18.75% following a weak earnings report and reduced profit guidance for the year. CEO Frank Clyburn expects a turnaround in the second half of this year, but not enough to improve year-over-year sales volume.

Thursday was not a particularly good day for AI chatbots. Let’s review. Microsoft Corp. (NASDAQ: MSFT), which started the frenzy late last year, closed down 1.17%. Alphabet Inc. (NASDAQ: GOOGL), which announced its Bard chatbot earlier this week, closed down 4.39% (down nearly 12% for the past five trading sessions).

Three Chinese entrants in the AI chatbot battle did a little better. Baidu Inc. (NASDAQ: BIDU) said it was working on a chatbot it calls Ernie. The stock dropped 2.8% on Thursday. Inc. (NASDAQ: JD) said it is speeding up its development efforts, and the shares added 0.18%. Alibaba Group Holding Ltd. (NYSE: BABA) was reported to be working on expanding the capabilities of its DingTalk communications and collaboration application, sending the stock up 3.19% for the day.

Writing isn’t the only thing being threatened by artificiality. Google is working on a model that can generate music. Called MusicLM, the model generates music from text descriptions like “a calming violin melody backed by a distorted guitar riff.”

We asked a semi-pro bluegrass musician to give MusicLM a spin and this was his response:

It’s interesting how the results are in some ways very impressive and in some ways very bad. Like, it can come up with an appropriate beat and bassline, and plausible instrumentation and the overall genre/vibe seems largely accurate for each chunk I listened to. That’s really very impressive. But its novel melodies are usually tuneless and meandering, and when provided an existing melody, it doesn’t really seem to be able to parse an implied beat or mild variations in tuning (it goes out of tune surprisingly often). And the harmonies sometimes go into weird and random places. Maybe they’ll fix all of these problems in the next 5 years, but I don’t think machine-learning music is going to be topping the charts anytime soon.

Could be a review of AI chatbots, no?

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