CNBC Daily Open: Market correction may not be over yet

Broad rally
Wall Street staged a broad-based rally, snapping a three-day losing streak. The Dow Jones Industrial Average rose almost 300 points, while the S&P 500 and Nasdaq Composite both rose more than 1%. All 11 S&P 500 sectors closed in positive territory. Mega caps rebounded from Monday's losses, with Nvidia and Meta Platforms, gaining 3.8% and 3.9%, respectively. The yield on the 10-year Treasury ticked higher, while U.S. oil prices rose after hitting six-month lows on Monday.

Not so super
Super Micro Computer shares fell 13% after the company's fourth-quarter earnings missed estimates. The company, whose first-quarter revenue forecast exceeded Wall Street's estimates, also announced a 10-for-1 stock split. Super Micro is a key supplier of servers for Nvidia, a major player in the AI boom, and has seen significant growth in recent years. However, the company's profitability is now a concern for investors. Its gross margin dropped to 11.2% in the reported quarter, down from 17%, a year earlier. 

Microsoft vs Delta
Microsoft accused Delta Air Lines of outdated technology after an IT outage in July caused the airline to cancel more than 5,000 flights. The company, which said the incident had caused it $500 million in losses, is seeking damages from Microsoft and CrowdStrike. A botched software update from CrowdStrike last month had affected millions of computers running Microsoft Windows. Microsoft questioned why Delta struggled to recover compared to other airlines, suggesting Delta hasn't modernized its IT infrastructure. Delta refutes the claim.

X sues advertisers
Elon Musk's X, formerly Twitter, is suing a group of advertisers for allegedly orchestrating an illegal boycott that cost the platform billions in revenue. The lawsuit, filed in Texas, accuses the World Federation of Advertisers and its members of violating antitrust laws by stopping advertising after Musk's takeover. Musk, on X, declared "war" against the advertisers, while X CEO Linda Yaccarino cited evidence uncovered by the U.S. House Judiciary Committee to support the lawsuit's claims.

Asia markets rise
Japanese stocks rose Wednesday after the Bank of Japan deputy governor said the central bank would not raise rates while markets were "extremely volatile." The yen fell 2.3% to 147.75 against the dollar boosting Japan's export-heavy Nikkei 225. The index was up 2.8% after gaining over 10% on Tuesday. Hong Kong's Hang Seng index rose 1.67% and mainland China's CSI 300 gained 0.28% after China's imports in July grew faster-than-expected, while export growth missed forecasts. South Korea's Kospi jumped 2.45% and Australia's S&P/ASX 200 climbed 0.55%.

[PRO] 'Highest conviction' stocks
Australian investment bank Macquarie has identified 10 high-conviction stocks with buying opportunities amidst market volatility and sell-offs, driven by fears of a U.S. recession and unwinding of the Japanese yen carry trade.

Wall Street spent the session crawling out of a hole but Goldman Sachs warned the correction may not be over yet. And sure enough, futures indicated a lower opening to Wednesday's session. 

Peter Oppenheimer, Goldman Sachs' chief global equity strategist, told CNBC the market correction was "healthy and somewhat inevitable" after a very strong first half of the year especially given signs of a slowing U.S. economy and growing "complacency" in the market.

"My feeling is that this correction, although is stabilising, is not yet over. We're still going to see, I think, some choppy environments in the short-term as investors really start to calibrate and get more confident again about the direction of interest rates and the economy. But at the same time I don't think we are in a bear market and there are going to be some good opportunities here."

Asked by CNBC's David Faber if now was a good entry point to get investors back into the market, with the multiple on the Nasdaq down to 24-time earnings, Oppenheimer said, "I think it hasn't come down enough." He expects further declines before value investors see it as a good buying opportunity.

Mega cap stocks were routed on Monday losing $1 trillion in early trading before recovering some ground. There has been a lot of concern around earnings and the billions spent by Microsoft, Meta, Amazon and Alphabet on AI data centers. Hedge fund Elliott Management reportedly told clients that Nvidia was in a "bubble" and the AI frenzy was "overhyped."

Ankur Crawford, Alger portfolio manager, urged investors to look beyond short-term earnings and focus on the long-term earnings power of companies leading the AI revolution.

"If you look at just Microsoft's Azure numbers, they went from being a zero-dollar business seven quarters ago to having a $6 billion run rate today. I would challenge anyone to tell me what other business grew from zero to $6 billion in a year and a half. And that is just the early early innings of this AI trade."

— CNBC's Hakyung Kim, Samantha Subin, Sean Conlon, Jeff Cox, Rohan Goswami, Leslie Josephs, Spencer Kimball and Dylan Butts contributed to this report.