Before the Bell: More Bank Earnings Optimism; Google May Lose Samsung; New, Cheaper Xpeng EVs

Premarket action on Monday had the three major U.S. indexes trading nearly flat. The Dow Jones industrials were up 0.06% and the S&P 500 up 0.05%, but the Nasdaq was 0.06% lower. Who will blink first, the bulls or the bears?

Seven of 11 market sectors closed lower Friday. Real estate (−1.68%) and utilities (−1.11%) posted the day’s worst losses. Financials (1.05%) and communications services (0.31%) added the most. The Dow closed down 0.42%, the S&P 500 down 0.21% and the Nasdaq down 0.35% on Friday.

Two-year Treasuries added 12 basis points to end Friday at 4.08%, and 10-year notes rose by seven basis points to close at 3.52%. In Monday’s premarket, two-year notes were trading at around 4.15% and 10-year notes at about 3.54%.

Friday’s trading volume was above the five-day average. New York Stock Exchange losers outpaced winners by 1,945 to 1,018, while Nasdaq decliners led advancers by about 3 to 2.

The Census Bureau releases March retail sales data before markets open on Friday. Sales are forecast to have dropped by 0.4% in the month, equal to the February decline. Excluding automobiles, sales are forecast to drop by 0.4%, a larger decline than February’s 0.1% drop.

Friday’s report on retail sales showed a decline of 1% month over month, indicating weakness in consumer spending and raising worries of an economic slowdown.

Among S&P 500 companies, JPMorgan Chase & Co. (NYSE: JPM) led Friday’s winners with a gain of 7.55%. Citigroup Inc. (NYSE: C), Bank of America Corp. (NYSE: BAC) and BlackRock Inc. (NYSE: BLK) ranked second through fourth after JPMorgan, Citigroup and BlackRock reported better-than-expected profits. Charles Schwab, M&T Bank and State Street report results Monday morning, and BofA, BNY Mellon and Goldman Sachs will release earnings Tuesday morning.

Contract drug maker Catalent Inc. (NYSE: CTLT) dropped 26.84% on Friday to post the worst loss among S&P 500 stocks after issuing a profit warning. Dish Network Corp. (NASDAQ: DISH) dropped 6% after a downgrade from UBS, and Boeing Co. (NYSE: BA) fell by 5.56% after revealing delays in 737 Max production.

At the Shanghai auto show that began Monday, Chinese EV maker Xpeng Inc. (NYSE: XPEV) introduced a new platform for its next-generation vehicles that the company said would reduce R&D cycle times by 20% by making 80% of a vehicle’s architecture “compatible.” Xpeng claims “50 percent optimization of overall vehicle development costs, a 30 percent reduction in software iteration cycles, and a 300 percent increase in [over-the-air] update speed.”

The Xpeng G6 SUV, which the company plans to reveal on Tuesday, is the first of several new models that will be built on the new platform. According to the CNEVPost, first deliveries of the G6 are due by the end of the second quarter, and the vehicle is expected to be priced between $29,100 and $43,700. Xpeng’s shares traded up more than 11% in Monday’s premarket.

The New York Times reported Sunday that Alphabet Inc. (NASDAQ: GOOGL) may lose its contract as the default search engine on Samsung Android devices. According to the Times, Samsung is considering replacing Google Search with Microsoft Corp.’s (NASDAQ: MSFT) Bing search engine.

Alphabet pays both Samsung and Apple Inc. (NASDAQ: AAPL) substantial amounts for the right to ship as the default search engine on the two companies’ mobile devices.

An estimated $3 billion in annual revenue is at stake with the Samsung contract. An additional $20 billion is tied to a similar Apple contract that will be up for renewal this year.

Google is responding to the threat by launching a project code-named Magi that adds artificial intelligence (AI) features to its search engine, giving consumers a “far more personalized experience than the company’s current service.”

Magi is just an interim fix, however. The Times reports that “Google is racing to build an all-new search engine powered by [AI] technology.”

What do people want from AI? Whatever they think they want, what they are likely to get is a computer model of what is already available in digitized form on the internet. Portuguese politician and writer Bruno Maçães asks, “Why would we need to produce an imperfect simulation of the internet when we have the real thing readily accessible through search engines and other tools?” His answer:

And indeed there would be no use assuming we wanted an AI to exist outside the internet, in the same way that we exist outside the internet. That is not the point, however. The point of something like ChatGPT is to bring the internet alive with resident intelligences. We are creating an AI that lives, thinks and acts fully within the internet, just as we live, think and act in the world. For such an AI, learning how the internet works and being able to simulate its processes is the very definition of being intelligent.

Sponsored: Tips for Investing

A financial advisor can help you understand the advantages and disadvantages of investment properties. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

Investing in real estate can diversify your portfolio. But expanding your horizons may add additional costs. If you’re an investor looking to minimize expenses, consider checking out online brokerages. They often offer low investment fees, helping you maximize your profit.