US service sector growth slowed to 54.0 in June, hiring rose. Microsoft cut 4,800 jobs, mostly in Xbox. Klarna applied for a US bank charter to bring BNPL lending in-house.
Alpha Score of 56 reflects moderate overall profile with poor momentum, strong value, strong quality, moderate sentiment.
Three developments this week offer a snapshot of the risks facing different parts of the market: a cooling but still expanding service sector, a major tech layoff, and a fintech company's push for a bank charter.
The Institute for Supply Management's index of U.S. service sector activity fell to 54.0 in June from 54.5 in May. The decline was driven by a drop in new orders, which had been elevated in prior months as businesses front-loaded purchases. The employment subindex rose after several months of softness, indicating that firms are still hiring despite the moderation in overall activity. Price pressures and supply constraints remain, the report showed. Bloomberg reported the data. The ISM reading of 54.0 signals continued expansion, though at a slower pace than the previous month.
Microsoft cut about 4,800 jobs, with a large share coming from its Xbox division. The company is spinning off or selling several game studios and reducing its game publishing footprint to focus on fewer core franchises. Xbox leadership said the business has been underperforming, with weak profit margins and slower-than-expected growth in services like Game Pass. The Wall Street Journal reported the details. The layoffs follow similar workforce reductions at other large technology companies this year.
Microsoft's Alpha Score sits at 56 out of 100, a Moderate rating. The stock trades near $386.73, down 0.96% on the day. MSFT stock page
Klarna has applied for a U.S. bank charter with regulators in Utah and the FDIC. The company aims to establish a new FDIC-insured subsidiary called Klarna Bank USA. If approved, the move would let the buy-now-pay-later company shift away from relying on partner banks and bring its U.S. lending and payments in-house under its own banking license. Klarna said this step would strengthen its operations and increase regulatory oversight. CNBC reported the story. The charter would subject Klarna to federal banking supervision, including capital and consumer protection requirements.
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