Nasdaq hits record, Fed’s Kashkari seeks more inflation data, GameStop soars

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.

Nasdaq hits record
The Nasdaq Composite closed above 17,000 for the first time, driven by a surge in Nvidia shares, in an otherwise lackluster day for the market. The S&P 500 edged up 0.02%. The Dow Jones Industrial Average fell more than 200 points after hawkish comments from Minneapolis Federal Reserve President Neel Kashkari. The yield on the 10-year Treasury note rose following a $70 billion Treasury Department auction of 5-year notes that met with weak demand. Oil prices increased 3% ahead of an OPEC+ meeting scheduled for Sunday. 

Fed’s Kashkari seeks more inflation data
The Federal Reserve should wait for significant progress on inflation before cutting interest rates, Kashkari told CNBC on Tuesday. When asked about the conditions needed for rate cuts this year, Kashkari stated, “I think we need to see many more months of positive inflation data to give me confidence that it’s appropriate to dial back.” He emphasized that the central bank could even consider rate hikes if inflation does not subside. “I don’t think we should rule anything out at this point,” he added. 

American Airlines slashes outlook
Shares of American Airlines slid more than 8% in extended trading after the company slashed its second-quarter sales outlook. The airline also said its chief commercial officer, Vasu Raja, would be leaving the company next month. Raja had been on leave recently, and a spokeswoman for the carrier said last week that he was not leaving. That changed after internal discussions in the past few days, according to a person familiar with the matter. 

GameStop soars
Shares of GameStop jumped more than 20% after the video game retailer announced it raised $933 million from a share offering. Plans for the stock sale had been announced earlier this month amid a resurgence of the meme stock craze. It follows a social media post from “Roaring Kitty,” an account associated with the 2021 GameStop short squeeze, which had been inactive for nearly three years.

Asia-Pacific markets mostly lower
Australia’s S&P/ASX 200 fell 1.2% following stronger-than-expected inflation data for April, suggesting the central bank may not cut interest rates this year. Japan’s Nikkei 225, Korea’s Kospi and Hong Kong’s Hang Seng were all trading lower. Mainland China’s CSI 300 index was up 0.38% after the International Monetary Fund raised the country’s growth forecast to 5% this year from 4.6% on “strong” first-quarter figures and recent policy measures. 

[PRO] Riding the AI boom
CNBC’s Todd Gordon analyzes a cybersecurity company that could benefit from investor enthusiasm for artificial intelligence-related stocks. One analyst predicts the company’s market cap could increase by $25 billion.

Texas Instruments has become the latest company targeted by activist investor Elliott, which has taken a $2.5 billion stake in the chipmaker. Elliott is pushing for changes in how Texas Instruments manages its free cash flow. 

Activism has long been an integral part of Wall Street’s arsenal for effecting change in corporate decision-making. In one of the earliest examples, Benjamin Graham successfully pressured Northern Pipeline, a subsidiary of Standard Oil, to return cash to shareholders in the 1920s. Another oil company is now under fire for its response to activism.

ExxonMobil is facing accusations of “intimidation” and “schoolyard bullying” from the $484 billion California Public Employees’ Retirement System (CalPERS). This confrontation culminates today at Exxon’s shareholder meeting, where CalPERS has publicly announced its intention to vote against all of Exxon’s 12 director nominees and CEO Darren Woods. CalPERS is not alone in voicing its displeasure with the oil giant.

Exxon’s troubles began when it pursued legal action against two activist investors, Arjuna Capital and Follow This, which had submitted a shareholder proposal calling for tougher emissions targets. Despite the withdrawal of the proposal after legal action was initiated, Exxon persists in its lawsuit, telling the Financial Times that the climate activists intended to “financially hurt” the company. In a statement to CNBC, Exxon claimed Arjuna and Follow This are attempting to “silence the voices of up to 90% of our voting shareholders who have rejected the proposal twice.”

CalPERS, which holds a $1 billion stake in Exxon, argues that Exxon could have sought redress through the Securities and Exchange Commission, which has approved two-thirds of similar claims. The pension fund further contends that the lawsuit could have devastating consequences for shareholder rights.

“If ExxonMobil succeeds in silencing voices and upending the rules of shareholder democracy, what other subjects will the leaders of any company make off limits?” CalPERS CEO Marcie Frost and board President Theresa Taylor stated in an open letter. “Worker safety? Excessive executive compensation?”

CalPERS has characterized the lawsuit as reckless and has urged the directors to prevent CEO Woods from pursuing this “destructive effort.” They have also called on other shareholders to join them in “sending a message that our voices will not be silenced.”

— CNBC’s Rohan Goswami, Alex Harring, Pia Singh, Leslie Josephs, Jenni Reid, Spencer Kimball, MacKenzie Sigalos, Todd Haselton, Sean Conlon and Sophie Kinderlin contributed to this report.