The daily business briefing: September 11, 2023

1. Alibaba shares drop after outgoing CEO also leaves cloud unit

Daniel Zhang, the outgoing chairman and CEO of Alibaba, unexpectedly stepped down as head of the Chinese tech giant's cloud division after just months in that job. Alibaba shares dropped more than 4% in Hong Kong on Monday as the news raised concerns about the potential spin-off of the unit. New Alibaba CEO Eddie Wu will take over as acting CEO and chair of the cloud unit, which was valued at $41 billion to $60 billion earlier this year and has been struggling with weak sales growth ahead of an initial public offering planned for 2024. "We have mixed thoughts on this news," but "there are concerns of disagreements among Alibaba's partners," Morningstar analyst Chelsey Tam wrote in a note.

Reuters The New York Times

2. Instacart targets $9 billion valuation in IPO

Instacart, which was valued at $39 billion in a 2021 fundraising round, is targeting a valuation between $8.6 billion and $9.3 billion in its looming initial public offering, The Wall Street Journal reported Sunday. The company plans to raise up to $616 million in the IPO. The lower valuation for the grocery-delivery company reflects weakening investor interest in private companies highly dependent on growth as the Federal Reserve's inflation-fighting interest rate hikes raise borrowing costs. The San Francisco company is expected to start marketing the IPO to investors as soon as Monday, according to the Journal. Its shares are expected to make their Nasdaq debut next week.

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The Wall Street Journal

3. Survey: Consumers plan to cut spending by early 2024

U.S. consumers, whose continued spending has helped prevent a recession, might cut back in early 2024, resulting in the first drop in personal consumption since the start of the coronavirus pandemic, Bloomberg reported Sunday, citing its latest Markets Live Pulse survey. More than half of the survey's 526 respondents said the reversal would hit in the first quarter of next year, while 21% said it would hit in the fourth quarter of this year. The cuts in personal consumption — the biggest driver of economic growth — come as higher borrowing costs and dwindling Covid-era savings force American families to tighten their budgets, Bloomberg reported.

Bloomberg

4. Stock futures rise ahead of inflation data

U.S. stock futures rose early Monday ahead of the release of key inflation data mid-week. Futures tied to the Dow Jones Industrial Average and the S&P 500 were up 0.2% and 0.4%, respectively, at 6:45 a.m. ET. Nasdaq futures were up 0.5%. All three major indexes made modest gains on Friday at the close of a losing week. The latest consumer price and producer price indexes come out on Wednesday and Thursday, providing investors with an update on inflation that could provide clues on the Federal Reserve's next moves on interest rates. "Overall, the market will be looking for direction amid recent choppiness," Yung-Yu Ma, chief investment strategist at BMO Wealth Management, told CNBC.

CNBC

5. Hostess shares rise as sale to Smucker nears

Hostess Brands shares jumped 7% in premarket trading on Monday after reports that fellow snack maker J.M. Smucker is close to a deal to buy the company for nearly $5 billion. The acquisition would exclude Hostess' $900 million in net debt, Reuters reported, citing sources familiar with the matter. Hostess' stock has gained nearly 27% since Aug. 25, when The Wall Street Journal first reported a deal was looming. The gains boosted its market capitalization to about $3.7 billion. The Journal said a deal could be announced as soon as Monday. It would mark a big turnaround for Hostess, maker of Twinkies, after two Chapter 11 bankruptcies. Smucker beat out another suitor, Cheerios and Betty Crocker parent General Mills.

The Wall Street Journal Reuters