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Tag: Dow Jones Industrial Average

  • Wells Fargo CEO talks up reasons to love the stock — plus, what’s behind the market drop

    Wells Fargo CEO talks up reasons to love the stock — plus, what’s behind the market drop

    Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street.

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  • Stocks pop after Fed decision, oil plunges, earnings mixed — what to watch in the market

    Stocks pop after Fed decision, oil plunges, earnings mixed — what to watch in the market

    Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street. (We’re no longer recording the audio, so we can get this new written feature to members as quickly as possible.)

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  • Here are the portfolio’s top 5 performing stocks since the March Monthly Meeting

    Here are the portfolio’s top 5 performing stocks since the March Monthly Meeting

    Traders work on the floor of the New York Stock Exchange (NYSE) on April 10, 2024 in New York City. As new inflation data released today showed a continued rise, stocks fell across the board with the Dow falling over 400 points. 

    Spencer Platt | Getty Images

    Stocks hit a rough patch after the Club’s March Monthly Meeting as Wall Street grappled with increasing odds of higher-for-longer interest rates.

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  • Stock market today: Stocks try to rebound as investors shake off Mideast tensions, focus on earnings

    Stock market today: Stocks try to rebound as investors shake off Mideast tensions, focus on earnings

    Homebuilder stocks fell on Monday after a closely watched housing sentiment index broke a four-month streak of gains amid high mortgage rates.

    The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) stayed at 51 in April, unchanged from March. To be sure, any number over 50 indicates that more builders view conditions as good than poor.

    “April’s flat reading suggests potential for demand growth is there, but buyers are hesitating until they can better gauge where interest rates are headed,” NAHB chief economist Robert Dietz said in a statement.

    Lennar (LEN), Pulte (PHM), and Toll Brothers (TOL) were all down more than 1% mid-morning, while the SPDR S&P Homebuilders ETF (XHB) was off 0.3%.

    The flat confidence level among builders underscores how many prospective buyers and sellers, already dealing with high home prices and limited housing stock, are staying put. It comes after a higher-than-expected inflation print last week prompted investors to scale back the number of rate cuts they see this year to two, less than the median of three projected by the Fed at its March meeting.

    “With the markets now adjusting to rates being somewhat higher due to recent inflation readings, we still anticipate the Federal Reserve will announce future rate cuts later this year and that mortgage rates will moderate in the second half of 2024,” Dietz said.

    Mortgage rates have stayed slightly higher compared to the beginning of the year, pushing borrowers to the sidelines just as the spring homebuying season kicks into gear. The average rate on the 30-year fixed mortgage rate rose to 6.88%, higher than 6.82% the previous week, Freddie Mac reported.

    In April, builders pulled back slightly on cutting home prices, with 22% of builders reporting doing so, down from 24% in March and 36% in December last year.

    Meanwhile, the use of sales incentives ticked down to 57% in April from a reading of 60% in March.

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  • Wall Street could be in for another good quarter after an exuberant start to the year, history shows

    Wall Street could be in for another good quarter after an exuberant start to the year, history shows

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  • CNBC Daily Open: Wall Street focus turns to the Fed

    CNBC Daily Open: Wall Street focus turns to the Fed

    A trader works, as a screen displays a news conference by Federal Reserve Board Chair Jerome Powell following the Fed rate announcement, on the floor of the New York Stock Exchange on Dec. 13, 2023.

    Brendan Mcdermid | Reuters

    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.

    What you need to know today

    Stocks close lower
    Wall Street ended lower on Friday as investors await the Federal Reserve’s policy meeting this week for insights on rate cuts. The S&P 500 posted its second straight weekly drop, down 0.65%. The Nasdaq Composite retreated 0.96% and the 30-stock Dow lost 0.49%. In Asia, the Bank of Japan will decide at the end of it’s two-day policy meeting starting Monday if the country is ready to scrap the world’s last negative interest rate policy.

    White House on TikTok
    The White House has called on a more divided Senate to ‘move swiftly’ on the TikTok bill that requires Chinese tech company ByteDance to sell the video app or face a ban in the U.S. Last week, the House of Representatives passed the legislation with strong bipartisan support and President Joe Biden has indicated he would sign it if approved by Congress.

    Bullish on global trade
    The CEO of Hapag-Lloyd, one of world’s top ocean shippers, says he’s more bullish on trade for this year. He told CNBC inventories are depleted in many cases and the ocean carrier has seen a recovery after the Chinese New Year. Shares of the company recently plunged after it posted a sharp fall in net profit in 2023 and cut its dividend.

    Laid-off tech workers face gloom
    Tech workers recently laid off are struggling with a “sense of impending doom” as jobs cuts are at the highest since the dot-com crash.CNBC spoke to number of people about how they’re navigating the challenging market. Jobs are getting tougher to find with many in the sector having to settle for pay cuts.

    [PRO] U.S. election risk on China stocks  
    Goldman Sachs has revised its barometer for the level of risk from U.S.-China tensions in Chinese stocks. It now stands at 53 out of 100, signaling a “somewhat benign” outlook for relations between the two countries. “The build-up to and the election will be consequential to asset markets globally, US-China relations, and the returns of Chinese equities,” the analysts said.

    The bottom line

    It will be a pivotal week for Wall Street as markets attention will turn to the Fed.

    Signals from Fed Chair Jerome Powell and the other officials on future rate cuts will be in sharp focus as policymakers give updates on rates, economic growth, inflation and unemployment at their two-day meeting which wraps up on Wednesday.

    Last week’s one-two punch of bad news on consumer and producer prices, sparked investor anxiety that inflation may have plateaued as price pressures remain sticky.

    “Hotter-than-expected inflation data to start the year argue for a hawkish-leaning message from the Fed at the March FOMC meeting. That said, in a very close call, we do not yet expect this to manifest in the Fed signaling less easing this year,” said Deutsche Bank in a note.

    “Our baseline remains that the first-rate cut will come in June and the Fed will deliver 100bps of reductions this year. However, risks are clearly skewed to more hawkish outcomes. The timing and pace of rate cuts could well be irregular this cycle and will likely be highly data dependent.”

    Investors will also want to know whether the Fed will continue to pencil in three rate cuts for this year. Some economists argue there’s a good chance it could be pared back to only two.

    JPMorgan Chase CEO Jamie Dimon recently said the central bank should move slowly on rate cuts given inflation pressures.  

    “You can always cut it quickly and dramatically. Their credibility is a little bit at stake here,” he said. “I would even wait past June and let it all sort it out.”

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  • CNBC Daily Open: Sticky inflation muddies water for Fed

    CNBC Daily Open: Sticky inflation muddies water for Fed

    A man shops for fruit at a grocery store on February 01, 2023 in New York City.

    Leonardo Munoz | Corbis News | Getty Images

    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.

    What you need to know today

    Stocks rally
    Wall Street     closed higher on Tuesday with the S&P 500 hitting a fresh record, up 1.1%. The blue-chip Dow gained over 200 points, while the Nasdaq added 1.5% as U.S. inflation data came in mildly higher than expected in February. 

    Record shareholder payouts
    Shareholder payouts hit a record $1.7 trillion last year, according to a new report by British asset manager Janus Henderson. Nearly half of the world’s total dividend growth came from the banking sector, which delivered record payouts as rising borrowing costs lifted lenders’ margins, the report found. 

    Boeing crisis hurt airlines
    CEOs from several airlines say Boeing’s delivery delays have forced the carriers to change their growth plans. Boeing’s crisis has deepened since a door plug blew out midflight from an Alaska Airlines Max 9 in January. Southwest Airlines, Alaska Airlines and United, are some of the top buyers of Boeing’s aircraft that have been impacted by its problems.

    Citadel on rate cuts
    Inflation tailwinds remain and the Fed shouldn’t cut rates too quickly, says Citadel founder and CEO Ken Griffin. “If I’m them, I don’t want to cut too quickly,” he noted, adding that it will be “more devastating” if they have to change direction after initially cutting rates. “I think they are going to be a bit slower than what people were expecting two months ago in cutting rates.”

    [PRO] Buy or sell Nivida?
    Nvidia’s stock has surged over 200% in 2023 alone, powered by the global AI frenzy. Is it time to take profit or should investors stay the course? Experts who currently hold the chip giant’s stock share their insights.   

     

    The bottom line

    Once again, inflation came in hot for a second straight month.   

    February’s consumer prices data was a touch better than January’s troubling inflation print. 

    Still, core inflation — which excludes food and energy — was stronger than expected, up 0.4% last month, which reflects lingering stickiness in price pressures.

    Investors don’t expect that latest data to move the needle on the Fed cutting rates in June. That could be why markets have had a more muted reaction to the news.

    “We have the numbers we have and this wasn’t great news for the Fed but markets don’t see it as a big threat to rate cuts later in the year,” Kathy Jones, chief fixed income strategist at Charles Schwab, said on X.

    Yet, the hot print poses a problem for the Fed and muddies the water for its deliberations on the coming rate cuts.

    “The long-term disinflation trajectory probably has not changed, but the path to the Federal Reserve’s 2% target will be choppy,” noted LPL Financial chief economist Jeffrey Roach. “Expect to see markets struggle with what this means for Fed policy.”

    There is a lot riding for Wall Street when the central bank meets next week. Investors’ main focus will be on whether the Fed will continue to pencil in three rates for this year or will officials decide to change course.

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  • CNBC Daily Open: Americans sour on the economy

    CNBC Daily Open: Americans sour on the economy

    US President Joe Biden speaks to employees at the CS Wind America Inc on November 29, 2023 in Pueblo, Colorado. 

    Helen H. Richardson | The Denver Post | Getty Images

    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.

    What you need to know today 

    Mixed bag on Wall Street
    U.S. stocks     ended mixed Tuesday as investors prepared for key inflation data due out later this week. The S&P 500 and the Nasdaq Composite closed with small gains, up 0.17% and 0.37%, respectively. The 30-stock Dow fell for a second straight day, off by 0.25%. Bitcoin also extended gains rising above $57,000. 

    Apple kills EV plans
    Apple has cancelled its plan to build electric cars, according to Bloomberg. This signals an end to the company’s secretive effort to compete in the EV space against rival Tesla. Reports of Apple’s ambition first surfaced in 2014 after it recruited automotive engineers and other talent from auto companies. 

    Will South Korean measures work?
    South Korea’s Japan-style measures to boost corporate governance may not work to lift its undervalued stock markets and tackle the so-called “Korea discount.” In its latest attempt, the Financial Services Commission revealed a “Corporate Value-up Program,” aimed at supporting shareholder returns through incentives including tax benefits.

    Honor’s foray into flip phones
    Chinese technology firm Honor will launch a foldable flip phone this year, the company’s CEO George Zhao told CNBC. It will be the firm’s first entry into the vertical-folding style of smartphone as the company looks to push into the premium end of the market in a challenge to tech giants like Samsung and Apple.

    [Pro] Alibaba’s compelling appeal
    Despite the recent slump in Alibaba’s shares, the Chinese e-commerce giant remains on the radar of fund managers. “Alibaba is our third biggest stock [position] now. Why? The valuation is absolutely compelling,” said Andrew Lapping, Ranmore’s chief investment officer.

    The bottom line

    Americans’ attitudes about the economy have soured.

    Consumer confidence fell to 106.7 in February, said the Conference Board, down from a revised 110.9 in January. This comes after a three-month streak of improving mood.

    The index measuring short-term expectations for income, business and the job market fell to 79.8 from 81.5 in January. A reading under 80 often signals an upcoming recession.

    While Americans were less worried about food and gas prices, there were rising concerns over jobs and the upcoming presidential elections.

    “The decline in consumer confidence in February interrupted a three-month rise, reflecting persistent uncertainty about the US economy,” said Dana Peterson, chief economist at The Conference Board. 

    “While overall inflation remained the main preoccupation of consumers, they are now a bit less concerned about food and gas prices, which have eased in recent months. But they are more concerned about the labor market situation and the US political environment.”

    The drop in consumer confidence was broad based, affecting most income groups, as well as among people under 35 years old and those aged 55 and over, according to Peterson.

    The survey findings reveal that despite data showing a strong labor market and a surprisingly resilient economy, public perception on the economy proves to be a challenge ahead of high-stakes elections this year.

    This signals troubling signs for President Joe Biden, who has been trying to tout his administration’s economic accomplishments ahead of a likely rematch against Republican nominee Donald Trump in November.

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  • Stock market today: US futures trade mixed with inflation data on deck

    Stock market today: US futures trade mixed with inflation data on deck

    US stock futures were mixed on Friday as investors braced for an inflation reading that could set the tone for the end of a bumpy data-driven week.

    S&P 500 (^GSPC) futures added 0.2% in the wake of another record closing high, but Dow Jones Industrial Average (^DJI) futures hovered below the flat line. Contracts on the tech-heavy Nasdaq 100 (^NDX) outperformed, rising almost 0.6%.

    The market has been on a ride this week as a series of mixed data prompted investors to keep reassessing their view of the US economy, and in turn the timing of interest rate cuts. The Dow sank 500 points just a day after notching an all-time high as a surprisingly hot consumer inflation report spurred a rout.

    Stocks have made up their deep losses after a steep decline in retail sales, putting weekly wins within reach for the Dow and the S&P 500. A Friday update on another key inflation gauge, the producer price index, will be closely watched given investors are on the alert for data that could sway Federal Reserve policy thinking.

    Read more: What the Fed rate decision means for bank accounts, CDs, loans, and credit cards

    In earnings-related moves, Coinbase (COIN) shares surged over 14% in premarket trading after the crypto exchange posted its first quarterly profit in two years. Applied Materials (AMAT) stock also jumped after the machinery maker’s forecast signaled a chip sector rebound.

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  • CNBC Daily Open: Wall Street rattled over Fed worries

    CNBC Daily Open: Wall Street rattled over Fed worries


    A trader works, as a screen displays a news conference by Federal Reserve Board Chairman Jerome Powell following the Fed rate announcement, on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., January 31, 2024. 

    Brendan McDermid | Reuters

    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.

    What you need to know today

    Wall Street retreats
    U.S. stocks     lost ground on Monday and Treasury yields rose amid lingering concerns that the Federal Reserve may not cut rates as much as expected. The blue-chip Dow fell over 200 points. The S&P 500 also slumped after hitting a record high last week. The Nasdaq Composite also dropped 0.2%. 

    Oil’s supply crunch
    The oil market faces a supply crunch by the end of 2025 as the world is not replacing crude reserves fast enough, according to Occidental CEO Vicki Hollub. About 97% of the oil produced today was discovered in the 20th century, she told CNBC. 

    Palantir surges
    Shares of Palantir spiked 19% in extended trading after the company reported revenue that topped analysts’ estimates. In a letter to shareholders, Palantir CEO Alex Karp said demand for large language models in the U.S. “continues to be unrelenting.”

    Red Sea tensions
    Higher shipping costs due to tensions in the Red Sea could hinder the global fight against inflation, said the Organisation for Economic Co-operation and Development. Clare Lombardelli, chief economist at the OECD, told CNBC that shipping-driven inflation pressures remain a risk rather than its base case.

    [PRO] Banking allure
    The banking sector offers attractive opportunities despite an increase in volatility, according to fund manager Cole Smead. “It’s the banks that made bad decisions that are making [other] banks look attractive in pricing,” Smead told CNBC, who picked two bank stocks that are in play. 

    The bottom line

    Investors are once again getting ahead of themselves on the Fed’s next move.

    Markets were rattled after Federal Reserve Chair Jerome Powell reiterated the central bank is unlikely to rush to lower interest rates. 

    Wall Street has been parsing his hawkish comments, yet in essence what Powell said over the weekend was no different than what he shared at Wednesday’s press conference: that he wants to see more evidence that inflation is coming down to a sustainable level.

    Still, the debate over the timing of rate cuts unsettled Fed watchers.  

    This sparked a sell-off spurred by higher bond yields. The yield on the 10-year Treasury spiked for a second day, trading around 4.163%. Typically, higher yields tend to indicate investors think the Fed will take longer to cut rates. 

    Fresh data out Monday also didn’t help.  A new survey showed the U.S. services sector expand at a faster-than-expected clip in January. 

    This on top of the booming jobs report released Friday, fueled investor worries that rates may stay elevated for much longer.

    Wall Street will now look ahead to the swath of Fed speakers this week. Perhaps they will shed more light on the path for rate cuts.



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  • Stock investors fear ‘no-landing’ economy could spell trouble. What’s next?.

    Stock investors fear ‘no-landing’ economy could spell trouble. What’s next?.


    While the U.S. stock market has been pricing in a “soft-landing” scenario for the economy, a blowout January jobs report, relatively strong corporate earnings, and Federal Reserve Jerome Powell’s comments during the past week could point to the possibility of “no landing,” where the economy is resilient while inflation stays on target.  

    Such a scenario could still be positive for U.S. stocks, as long as inflation remains steady, according to Richard Flax, chief investment officer at Moneyfarm. However, if inflation reaccelerates, the Fed may be hesitant to cut its policy interest rate much, which could spell trouble, Flax said in a call. 

    What the past week tells us

    Investors have just gone through the busiest week so far this year for economic data and corporate earnings reports, with stocks ending at or near their record highs.

    The Dow Jones Industrial Average
    DJIA
    finished the week with its nineth record close of 2024, according to Dow Jones Market Data. The S&P 500 index
    SPX
    scored its seventh record close this year on Friday, while the Nasdaq Composite
    COMP
    is about 2.7% lower from its peak.

    The Fed kept its policy interest rate unchanged in the range of 5.25% to 5.5% at its Wednesday meeting, as expected. However, in the subsequent press conference, Fed Chair Jerome Powell threw cold water on market expectations that the central bank may start cutting its key interest rate in March, and underscored that they want “greater confidence” in disinflation. 

    Roger Ferguson, former Fed vice chairman, said Powell introduced “a new kind of risk, the risk of no landing.” 

    In that scenario, inflation will stop falling, while the economy is strong, Ferguson said in an interview with CNBC on Thursday. However, Ferguson said he doesn’t think it is the likely outcome.   

    Traders were pricing in a 20.5% likelihood on Friday that the Fed will cut its interest rates in its March meeting, according to the CME FedWatch tool and that’s down from over 46% chance a week ago. The likelihood that the Fed will kick off its rate cutting program in May stood at 58.6% on Friday.  

    The stronger-than-expected January jobs data released on Friday further eliminates the chance of a rate cut in March, said Flax. 

    The U.S. economy added a whopping 353,000 new jobs in January while economists polled by The Wall Street Journal had forecast a 185,000 increase in new jobs. Hourly wages rose a sharp 0.6% in January, the biggest increase in almost two years.

    The past week has also been heavy with earnings reports, as several tech giants including Microsoft
    MSFT,
    +1.84%    ,
    Apple
    AAPL,
    -0.54%    ,
    Meta
    META,
    +20.32%    ,
    and Amazon
    AMZN,
    +7.87%
    reported their financial results for the fourth quarter of 2023. 

    Among the 220 S&P 500 companies that have reported their earnings so far, 68% have beaten estimates, with their earnings exceeding the expectation by a median of 7%, analysts at Fundstrat wrote in a Friday note.  

    While the reported earnings by big tech companies have been “okay,” the guidance was not, said José Torres, senior economist at Interactive Brokers.

    What has been driving the tech stocks’ rally since last year was mostly the prospect of sales from artificial intelligence products, but tech companies are not able to monetize the trend yet, Torres said in a phone interview. 

    Adding to the headwinds is a comeback of concerns around regional banks. 

    On Thursday, New York Community Bancorp Inc.’s stock triggered the steepest drop in regional-bank stocks since the collapse of Silicon Valley Bank in March 2023. New York Community Bancorp on Wednesday posted a surprise loss and signaled challenges in the commercial real estate sector with troubled loans.

    Meanwhile, the Fed’s bank term funding program, which was launched in March last year to bolster the capacity of the banking system, will expire on March 11. 

    If the Fed could start cutting its key interest rate in March, it would be “sort of like the ambulance that was going to pick regional banks up and save them,” said Torres. “Now the ambulance is coming in May at the earliest, I think that we’re in a particularly risky period from now to May,” Torres said. 

    What should investors do 

    Investors should go risk-off before May, according to Torres. “Last year, goods and commodities helped a lot on the disinflationary front. This year for disinflation to continue, we’re going to need services to start contributing to that. Then we’re going to need to see an increase in the unemployment rate,” Torres said. 

    He said he prefers U.S. Treasurys with a tenor of four years or shorter, as the long-dated ones may be susceptible to risks around the fiscal deficit and government borrowing. For stocks, he prefers the healthcare, utilities, consumer staples and energy sectors, he said. 

    Keith Buchanan, senior portfolio manager at Globalt Investments, is more optimistic. The slowdown in inflation and the relatively strong economic data and earnings “don’t really paint a picture for a risk-off scenario,” he said. “The setup for risk assets still leans towards the bullish expectation,” Buchanan added. 

    In the week ahead, investors will be watching the ISM services sector data on Monday, the U.S. trade deficit on Wednesday and weekly initial jobless benefit claims numbers on Thursday. Several Fed officials will speak as well, potentially providing more clues on the possible trajectory of rate cuts.



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  • Oil prices jump after drone attack kills U.S. troops, escalating Mideast crisis

    Oil prices jump after drone attack kills U.S. troops, escalating Mideast crisis


    Oil futures popped higher Sunday evening, after a drone attack that killed three U.S. service members in northern Jordan, blamed by the White House on Iran-backed militants, marked a major escalation of tensions in the Middle East.

    West Texas Intermediate crude for March delivery
    CL00,
    +1.22%

    CL.1,
    +1.22%

    CLH24,
    +1.22%
    was up $1.09, or 1.4%, at $79.10 a barrel on the New York Mercantile Exchange. March Brent crude
    BRN00,
    +1.15%

    BRNH24,
    +1.14%    ,
    the global benchmark, gained $1.11, or 1.3%, to trade at $84.66 a barrel on ICE Futures Europe.

    Much will ultimately depend on the U.S. response and whether Iran takes action aimed at shutting down the Strait of Hormuz, Tariq Zahir, managing member at Tyche Capital Advisors, told MarketWatch on Sunday afternoon.

    “We are on the cusp of this escalating, which could seriously impact the flow of crude oil,” he said.

    Three U.S. service members were killed and more than two dozen injured in a drone strike on a U.S. base in northeast Jordan, according to U.S. Central Command. They were the first U.S. fatalities in months of attacks on U.S. bases by Iran-backed militias since the start of the Israel-Hamas war in October.

    President Joe Biden attributed the Sunday attack to an Iran-backed militia group and said the U.S. “will hold all those responsible to account at a time and in a manner (of) our choosing.” News reports said U.S. officials were still working to conclusively identify the precise group responsible for the attack, but have assessed that one of several Iranian-backed groups is to blame.

    Some congressional Republicans called for direct retaliation on Iran.

    “We must respond to these repeated attacks by Iran & its proxies by striking directly against Iranian targets & its leadership. The Biden administration’s responses thus far have only invited more attacks. It is time to act swiftly and decisively for the whole world to see,” wrote Sen. Roger Wicker of Mississippi, the senior Republican on the Senate Armed Services Committee, in a post on X.

    Oil futures rallied last week to their highest since November, but with gains attributed in part to production outages in the U.S. and more upbeat expectations around economic growth.

    “Crude already has the wind to its back, so this will only offer further upside,” Chris Weston, head of research at Australian brokerage Pepperstone told MarketWatch in an email.

    With the U.S. election later this year, “Biden needs to strike a balance between increasing aggression that potentially puts U.S. serviceman lives in danger and could potentially raise the cost of living…while also showing a defiant stance that shows his resolve against terror,” Weston said.

    Oil prices have seen short-lived rallies around developments in the Middle East since the start of the Israel-Hamas war, but have failed to build in a lasting geopolitical risk premium. West Texas Intermediate crude
    CL00,
    +1.22%

    CL.1,
    +1.22%    ,
    the U.S. benchmark, remains around $15 below its 2023 peak in the mid-$90s set in late September. Brent crude
    BRN00,
    +1.15%    ,
    the global benchmark, pushed back above $80 a barrel last week.

    Attacks by Iran-backed Houthi militants on Red Sea shipping have forced a rerouting of tankers and cargo ships. For crude, that’s had implications for the physical market but hasn’t interrupted the flow of crude from the Middle East.

    A move by Iran aimed at closing off the Strait of Hormuz, the world’s biggest oil-transportation chokepoint, remains a top worry.

    The strait is a narrow waterway that links the Persian Gulf with the Gulf of Oman and the Arabian Sea. At its narrowest point, the waterway is only 21 miles wide, and the width of the shipping lane in either direction is just two miles, separated by a two-mile buffer zone.


    Energy Information Administration

    Around 21 million barrels a day of crude moved through the waterway in the first half of 2023, equivalent to around a fifth of daily global consumption, according to the U.S. Energy Information Administration.

    The U.S. stock market has largely looked past Middle East tensions, with the S&P 500
    SPX
    returning to record territory this month, while the Dow Jones Industrial Average
    DJIA
    has also set a series of records.

    Dow futures
    YM00,
    -0.20%
    were off 94 points, or 0.3% as Asian trading got under way, while S&P 500 futures
    ES00,
    -0.22%
    fell 12 points, or 0.2%, and Nasdaq-100 futures
    NQ00,
    -0.24%
    lost 0.3%.

    Read: Stock-market rally faces Fed, tech earnings and jobs data in make-or-break week

    Away from oil, there were no signs of a significant surge in demand for instruments that traditionally serve as havens during periods of increased geopolitical tension. Futures on U.S. Treasurys
    TY00,
    +0.21%
    saw a modest rise of 0.2%, while the U.S. dollar
    DXY
    was little changed versus major rivals and gold futures
    GC00,
    +0.41%
    ticked up 0.4%.

    Escalating Middle East tensions won’t go unnoticed by traders, but probably doesn’t warrant a “solid derisking,” Weston said, particularly with investors facing a barrage of major market events in the week ahead.

    For U.S.-focused investors, the week ahead features a Federal Reserve policy meeting, earnings from tech industry heavyweights and a crucial December jobs report.

    The Middle East situation “won’t take us too far off the rates, growth track, but we have an eye on whether this escalates,” Weston said.

    —Associated Press contributed.





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  • Treasury yields nudge higher ahead of key data releases

    Treasury yields nudge higher ahead of key data releases

    U.S. Treasury yields nudged slightly higher on Tuesday, as market participants await the release of key economic data points later in the week.

    At 5:52 a.m. ET, the yield on the benchmark 10-year Treasury note was around 3 basis points higher at 4.128% while the yield on the 30-year Treasury bond was up around 2.9 basis points at 4.345%.

    Yields move inversely to prices.

    Investors are trying to gauge when the Federal Reserve will begin cutting interest rates, which will be a key determinant of the trajectory for markets and the economy this year.

    Two significant pieces of economic data are on the slate this week: a preliminary fourth-quarter GDP growth figure is due on Thursday, followed by the Commerce Department’s closely-watched personal consumption expenditures price index for December on Friday.

    Despite the uncertain rate outlook, risk-on sentiment remained robust on Monday, as the Dow Jones Industrial Average and the S&P 500 both notched all-time highs.

    “It’s an economy proving to be more resilient than many thought and it’s one that is supported by the prospect of central banks cutting rates, and that’s a great environment for bonds and it’s a great environment for risky assets,” PGIM Principal and Global Investment Strategist Guillermo Felices told CNBC’s “Squawk Box Europe” on Tuesday.

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  • CNBC Daily Open: Make way for the bull market?

    CNBC Daily Open: Make way for the bull market?

    Visitors around the Charging Bull statue near the New York Stock Exchange on June 29, 2023.

    Victor J. Blue | Bloomberg | Getty Images

    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.

    What you need to know today

    All-time high
    The     S&P 500 closed at an all-time high on Friday, rising 1.23% to close at 4,839.81, setting fresh record intraday and closing highs from January 2022. The Dow Jones Industrial Average, which set its own record at the end of last year, added 395.19 points, or 1.05%, to end at 37,863.80. The Nasdaq Composite advanced 1.70% to 15,310.97.

    Macro triggers
    The U.S. will be releasing two big economic reports this week which could give fresh clues to which way the Federal Reserve could move. On Thursday, the Commerce Department will be releasing its initial estimate of fourth quarter gross domestic product, and on Friday, the December reading of the personal consumption expenditures price index — the Fed’s favored inflation gauge. 

    DeSantis out
    Florida Gov. Ron DeSantis dropped out of the 2024 presidential race two days before the Republican New Hampshire primary — endorsing front-runner Donald Trump, just as other candidates did after they cut their campaigns.

    Dispirited travel
    A federal judge’s order blocking a $3.8 billion-dollar deal that would have JetBlue Airways purchase rival Spirit Airlines leaves Spirit with an uncertain future — hitting budget travelers and the Arnold Palmer Regional Airport, an hour outside Pittsburgh, hard.

    [PRO] Earnings season
    Tesla, Netflix, Intel and Alaska Air are among nearly 70 S&P 500 companies that are scheduled to report earnings this week. Just 69% of the roughly 52 S&P 500 companies that have reported, according to FactSet, have surpassed expectations.

    The bottom line

    Make way for the bull market please.

    The S&P 500 benchmark hit fresh all-time intraday and closing highs on Friday, and by some technical indicators, entered a bull market.

    A clutch of fourth-quarter earnings and several key macroeconomic data points will provide fresh insights and catalysts for investors this week.

    Not too long ago, recession talk dominated Wall Street predictions even as the U.S. equity markets roared back in 2023 after a lackluster 2022.

    Even the Fed’s own staff were expecting a downturn after the central bank raised interest rates 11 times by a total of 5.25 percentage points to stymie rising inflation rates in the most aggressive cycle since the early 1980s.

    The outsized rally in the major technology counters has been among the big drivers for this emerging bull market — seemingly impervious to any broader geopolitical unrest globally and deepening Washington turmoil ahead of U.S. presidential elections in November.

    The same could well happen this year, extending the rally in the U.S. market — though some may still have lingering doubts, almost suspicious that further gains may be too good to be true.

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  • CNBC Daily Open: Markets in the green, Davos in full swing

    CNBC Daily Open: Markets in the green, Davos in full swing

    People attend the 54th annual meeting of the World Economic Forum, in Davos, Switzerland, January 18, 2024. 

    Denis Balibouse | Reuters

    This report is from today’s CNBC Daily Open, our new, 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.

    What you need to know today

    Dow snaps 3 days of declines
    The blue-chip     Dow Jones Industrial Average rose Thursday after falling for three straight days, with the other main indexes also ending higher. Wall Street’s indexes were boosted by a 3.3% rise in shares of Apple after Bank of America upgraded the company to a buy rating. In Asia, chip companies lifted Taiwan stocks, with heavyweight Taiwan Semiconductor Manufacturing Corp surging as much as 6.6%.

    Disney new activist target
    Activist investor Nelson Peltz has his eyes set on Disney. Peltz’s Trian Fund Management along with former Disney chief financial officer Jay Rasulo plan on launching a proxy fight to gain seats on Disney’s board. Peltz said he and Rasulo will be like “Batman and Robin” in an interview with CNBC, if they get elected.

    India makes ripples at Davos
    India is turning up the charm and courting investors at the World Economic Forum in Davos, Switzerland. The world’s most populous country touted three key elements – its growth story, digital infrastructure, and burgeoning startup ecosystem. Big Indian technology firms at the forum also showcased their use of artificial intelligence.

    India’s wealthy, China’s shrinking working population
    India’s affluent population is set to nearly double and drive consumption growth in the world’s fifth-largest economy. In China, official data showed the working age population was shrinking as a share of the total number of people in the country.

    [PRO] AllianceBernstein pick top Asian stocks
    The stocks are “highly ranked on a quantitative basis and our companies where our Bernstein analysts have a strong positive view,” the Wall Street bank wrote in a note. AllianceBernstein picked Asia-Pacific stock and sectors that are “particularly attractive right now.“

    The bottom line

    The week is wrapping up on a brighter note as U.S. markets snap losing streaks, while across the Atlantic headlines from Davos grab attention.

    The Dow Jones Industrial Average closed 0.54% higher, ending three-straight days of declines, while the tech-heavy Nasdaq Composite jumped 1.35%. The benchmark S&P 500 ended 0.88% higher and about 0.33% away from its closing record.

    Wall Street was boosted by Apple after Bank of America upgraded the stock. Semiconductors gained after the world’s largest chipmaker Taiwan Semiconductor Manufacturing Co. posted better than expected fourth-quarter results. U.S.-listed shares of TSMC jumped 9.8%.

    TSMC’s Taiwan-listed stocks jumped more than 6% in Asia trading hours.

    At Davos, India grabbed a few eyeballs as the world’s most populous country touted its growing economic strength.

    “India’s presence is certainly sizable — it has some of the most sought-after spots on the main promenade for tech companies,” Ravi Agrawal, editor-in-chief of Foreign Policy and former CNN India bureau chief, told CNBC. “As China’s economy slows down, India’s relatively rapid growth stands out as a clear opportunity for investors in Davos looking for bright spots.”

    Growing disposable income among Indians is also seen as a significant driver of the country’s consumption story. A Goldman Sachs report last week said around 100 million people in the world’s most populous country will become “affluent” — with annual income exceeding $10,000 — by 2027.

    So far, about 60 million people in India’s economy earn more than $10,000.

    The subject of Donald Trump also gained traction at Davos. The emerging theme was that top U.S. executives had no problem with the idea of Trump returning for a second term, while foreign chief executives feared such a scenario. Those worries mostly stemmed from Trump’s hardline policies including immigration and increased risk of potential conflicts.

    Sam Altman, OpenAI founder and CEO, said artificial intelligence as a sector and the United States as a country are both “going to be fine” regardless of who wins the U.S. presidential election.

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  • CNBC Daily Open: Dow breaks losing streak

    CNBC Daily Open: Dow breaks losing streak

    Traders work on the floor of the New York Stock Exchange during afternoon trading on January 17, 2024 in New York City. 

    Michael M. Santiago | Getty Images News | Getty Images

    This report is from today’s CNBC Daily Open, our new, 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.

    What you need to know today

    Dow snaps 3 days of declines
    The blue-chip     Dow Jones Industrial Average rose Thursday after falling for three straight days, with the other main indexes also ending higher. Wall Street’s indexes were boosted by a 3.3% rise in shares of Apple after Bank of America upgraded the company to a buy rating. European shares closed higher as well, but shares of British luxury watch retailer Watches of Switzerland tumbled 36% as it cut its annual guidance.

    Disney new activist target
    Activist investor Nelson Peltz has his eyes set on Disney. Peltz’s Trian Fund Management along with former Disney chief financial officer Jay Rasulo plan on launching a proxy fight to gain seats on Disney’s board. Peltz said he and Rasulo will be like “Batman and Robin” in an interview with CNBC, if they get elected.

    India makes ripples at Davos
    India is turning up the charm and courting investors at the World Economic Forum in Davos, Switzerland. The world’s most populous country touted three key elements – its growth story, digital infrastructure, and burgeoning startup ecosystem. Big Indian technology firms at the forum also showcased their use of artificial intelligence.

    Bitcoin at $40,000
    Bitcoin hit the $40,000 level Thursday amid a broad sell-off in cryptocurrencies. Analysts labeled the drop as “the correction post-ETF launch” as investors cash in. The world’s most popular cryptocurrency had surged ahead of last week’s regulatory approval to trade highly anticipated bitcoin ETFs.

    [PRO] For next week’s earnings
    With earnings season on Wall Street in full swing, the pros highlight a few stocks to watch out for. Analysts boosted their estimates for such companies leading up their quarterly reports, with tech stocks as a standout sector for the S&P 500. Still, overall S&P 500 earnings are expected to drop 6% in the fourth quarter.

    The bottom line

    The week is wrapping up on a brighter note as U.S. markets snap losing streaks, while across the Atlantic headlines from Davos grab attention.

    The Dow Jones Industrial Average closed 0.54% higher, ending three-straight days of declines, while the tech-heavy Nasdaq Composite jumped 1.35%. The benchmark S&P 500 ended 0.88% higher and about 0.33% away from its closing record.

    Wall Street was boosted by Apple after Bank of America upgraded the stock. Semiconductors gained after the world’s largest chipmaker Taiwan Semiconductor Manufacturing Co. posted better than expected fourth-quarter results. U.S.-listed shares of TSMC jumped 9.8%.

    At Davos, India grabbed a few eyeballs as the world’s most populous country touted its growing economic strength.

    “India’s presence is certainly sizable — it has some of the most sought-after spots on the main promenade for tech companies,” Ravi Agrawal, editor-in-chief of Foreign Policy and former CNN India bureau chief, told CNBC. “As China’s economy slows down, India’s relatively rapid growth stands out as a clear opportunity for investors in Davos looking for bright spots.”

    The subject of Donald Trump also gained traction at Davos. The emerging theme was that top U.S. executives had no problem with the idea of Trump returning for a second term, while foreign chief executives feared such a scenario. Those worries mostly stemmed from Trump’s hardline policies including immigration and increased risk of potential conflicts.

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  • CNBC Daily Open: Could better data be a good thing for markets?

    CNBC Daily Open: Could better data be a good thing for markets?

    Traders work on the floor of the New York Stock Exchange during afternoon trading on January 17, 2024 in New York City. 

    Michael M. Santiago | Getty Images News | Getty Images

    This report is from today’s CNBC Daily Open, our new, 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.

    What you need to know today

    Dow falls three days
    The blue-chip     Dow Jones Industrial Average fell for the third straight day Wednesday. Wall Street’s other two main indexes also dropped as better-than-expected retail sales data helped lift Treasury yields. In Asia, China stocks hit five-year lows, while Hong Kong stocks rebounded. Sectoral declines were led by mining stocks.

    Strong retail sales
    U.S. retail sales came in higher than expected for the last month of 2023 in a sign that holiday shopping picked up. Retail sales for December increased 0.6% vs. the 0.4% rise expected in a Dow Jones estimate. The rise was driven by clothing, accessories and online shopping.

    Dimon in Davos
    JPMorgan Chase CEO Jamie Dimon was one of the more highly anticipated guests at the World Economic Forum in Davos, Switzerland. Dimon discussed a variety of topics ranging from financial to geopolitical risks. He was also seen praising former U.S. President Donald Trump’s stance on the U.S. economy, immigration and taxes.

    Singapore minister face corruption charges 
    Singapore Transport Minister S Iswaran resigned as he faces corruption charges, the first for a cabinet minister in the island country. He pleaded not guilty to 24 charges of obtaining gratification as a public servant, two charges of corruption and one charge of obstructing the course of justice.

    [PRO] Citi says how to invest in the next AI boom
    Citi says it is definitely “not too late” for investors to invest in the “exponential growth” of AI technology. And after Nvidia sparked the AI boom, soaring over 200% last year, the investment bank now names its top plays for 2024. 

    The bottom line

    It’s only the third week of the new year and markets are slowly heading into a cycle of good data being received as bad news — at least from an equity standpoint.

    Treasury yields, however, have risen this week boosted by comments from Federal Reserve Governor Christopher Waller on Tuesday. The yield on the benchmark 10-year Treasury note continued to trade higher Wednesday, crossing the 4% mark on the back of better-than-expected U.S. retail sales for December.

    The data showed American consumers somewhat loosened their purse strings in the last month of 2023. But for Wall Street, that was hardly any reason to celebrate based on how aggressively markets have been pricing in interest rate cuts by the Federal Reserve.

    Waller’s comments on Tuesday at Davos about the U.S. central bank taking its time to cut rates this year, came as a sharp contrast to markets expecting the Fed’s first rate cut of 2024 to come as early as March.

    “The Fed was already hammering away on its ‘no rush to cut rates’ message, and today’s stronger-than-expected retail sales won’t give them any reason to change their tune,” said Chris Larkin, managing director of trading and investing for E-Trade from Morgan Stanley.

    About 55% of traders tracked by the CME Group’s FedWatch tool expect a 25 basis point rate cut in March, falling from 63% a day earlier.

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  • CNBC Daily Open: Good data, bad news?

    CNBC Daily Open: Good data, bad news?

    Traders work on the floor of the New York Stock Exchange during afternoon trading on January 17, 2024 in New York City. 

    Michael M. Santiago | Getty Images News | Getty Images

    This report is from today’s CNBC Daily Open, our new, 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.

    What you need to know today

    Dow falls three days
    The blue-chip     Dow Jones Industrial Average fell for the third straight day Wednesday. Wall Street’s other two main indexes also dropped as better-than-expected retail sales data helped lift Treasury yields. European stocks also fell, with British stocks leading regional losses after U.K. inflation clocked a surprise 4% year-on-year rise in December.

    Strong retail sales
    U.S. retail sales came in higher than expected for the last month of 2023 in a sign that holiday shopping picked up. Retail sales for December increased 0.6% vs. the 0.4% rise expected in a Dow Jones estimate. The rise was driven by clothing, accessories and online shopping.

    Dimon in Davos
    JPMorgan Chase CEO Jamie Dimon was one of the more highly anticipated guests at the World Economic Forum in Davos, Switzerland. Dimon discussed a variety of topics ranging from financial to geopolitical risks. He was also seen praising former U.S. President Donald Trump’s stance on the U.S. economy, immigration and taxes.

    Apple Watch sales banned in U.S. again
    The U.S. Court of Appeals for the Federal Circuit reinstated a sales ban on Apple’s watches with blood oxygen sensors. The ban will take effect Thursday, affecting both the Apple Watch Series 9 and Ultra 2 models. The injunction stems from an intellectual property dispute with medical device maker Masimo.

    [PRO] Cheap energy stocks
    The pros say some pockets of the energy market are poised for a jump after taking a beating last year. The energy sector was the second biggest loser on the S&P 500 last year. The CNBC Pro Screener Tool says they could still do well as companies in the sector are cheap and are seen rising over 10% their average price targets.

    The bottom line

    It’s only the third week of the new year and markets are slowly heading into a cycle of good data being received as bad news — at least from an equity standpoint.

    Treasury yields, however, have risen this week boosted by comments from Federal Reserve Governor Christopher Waller on Tuesday. The yield on the benchmark 10-year Treasury note continued to trade higher Wednesday, crossing the 4% mark on the back of better-than-expected U.S. retail sales for December.

    The data showed American consumers somewhat loosened their purse strings in the last month of 2023. But for Wall Street, that was hardly any reason to celebrate based on how aggressively markets have been pricing in interest rate cuts by the Federal Reserve.

    Waller’s comments on Tuesday at Davos about the U.S. central bank taking its time to cut rates this year, came as a sharp contrast to markets expecting the Fed’s first rate cut of 2024 to come as early as March.

    “The Fed was already hammering away on its ‘no rush to cut rates’ message, and today’s stronger-than-expected retail sales won’t give them any reason to change their tune,” said Chris Larkin, managing director of trading and investing for E-Trade from Morgan Stanley.

    About 55% of traders tracked by the CME Group’s FedWatch tool expect a 25 basis point rate cut in March, falling from 63% a day earlier.

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  • CNBC Daily Open: The Fed's rude awakening

    CNBC Daily Open: The Fed's rude awakening

    U.S. Federal Reserve Board Chairman Jerome Powell speaks during a news conference at the headquarters of the Federal Reserve on December 13, 2023 in Washington, DC.

    Win Mcnamee | Getty Images

    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.

    What you need to know today

    Markets start week lower
    U.S. stocks started the shortened week lower on Tuesday as investors closely watched fourth-quarter earnings, while tracking an uptick in Treasury yields after a Federal Reserve official said the central bank’s interest rate cutting cycle could be slower than what Wall Street expected. Stocks in Asia were lower, as Hong Kong led losses after tumbling 3%. China shares also fell after the country missed fourth quarter GDP estimates but met its year-end growth target of 5%.

    Slower pace of Fed cuts
    Federal Reserve Governor Christopher Waller said there will be monetary policy loosening this year but the central bank could do it at a slower pace. “In many previous cycles … the FOMC cut rates reactively and did so quickly and often by large amounts.” For this cycle, he said, “I see no reason to move as quickly or cut as rapidly as in the past.”

    China’s growth
    Official data showed China’s economy grew at a pace of 5.2% in 2023, exceeding Beijing’s 5% growth target for the year by a sliver. For the first time since the summer, China posted youth jobless rates which surged to 14.9% for December. The country temporarily stopped reporting the jobless rate for young people last year, saying it had to reassess its methods. Youth unemployment previously recorded a reading of over 20%.

    More Big Bank earnings
    Goldman Sachs and Morgan Stanley reported earnings on Tuesday, wrapping up results for Wall Street’s biggest six lenders. Morgan Stanley’s fourth quarter revenue topped analysts’ estimates but the bank warned of economic and geopolitical risks. Goldman Sachs exceeded expectations, boosted by higher asset and wealth management revenue.

    [PRO] ‘Buy the dip’
    Morgan Stanley highlights its key picks in Europe’s technology hardware sector after a “rollercoaster year” in 2023. The investment bank says the sector could recover as excitement grows around themes like artificial intelligence, advanced packaging, silicon carbide and gate-all-around transistors.

    The bottom line

    Wall Street returned for the first day back after a long weekend, only to be rudely awoken by a reality check from a Fed official.

    The blue-chip Dow Jones Industrial Average closed 0.62% lower, while the S&P 500 dropped 0.37%. The tech-heavy Nasdaq Composite ended with a 0.19% dip.

    Federal Reserve Governor Christopher Waller said there’s “no reason” for the central bank to “move as quickly” in its approach to lower interest rates this year. His comments were in sharp contrast to the aggressive policy loosening that markets are expecting this year.

    Traders still see a more than 64% chance of the Fed cutting interest rates by 25 basis points to 5%-5.25% range at its meeting in March, according to the CME Group’s FedWatch tool. Those bets came down substantially from a near 77% chance of rate cuts on Friday, when data showed producer prices unexpected dropped in December.  

    In Asia hours, China reported its highly anticipated economic growth figures along with an unexpected print on youth unemployment, which the country abruptly stopped reporting since last summer.

    And perhaps for good reason too.

    The December reading on jobless rate for young individuals came in at 14.9%, lower than record levels of 21.3% in June.

    Dan Wang, chief economist at Hang Seng Bank told CNBC’s Street Signs Asia she was surprised by the improvement in youth unemployment: “I can see that it is a result of government efforts and not so much improving economic fundamentals.”

    China’s economy grew at 5.2% for all of 2023, above the 5% growth target it had set for itself at the beginning of the year. For the fourth quarter, it also grew at a pace of 5.2% — falling short of a Reuters poll expectation of 5.3%.

    Day 2 at the World Economic Forum in Davos saw plenty more discussions.

    Artificial intelligence remained a hot topic, with Microsoft CEO Satya Nadella advocating for its uses, noting that more countries are now talking about AI in similar ways.

    “I think [a global regulatory approach to AI is] very desirable, because I think we’re now at this point where these are global challenges that require global norms and global standards,” Nadella said.

    Microsoft is a big player in the AI arms race.

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  • CNBC Daily Open: Fed's reality check

    CNBC Daily Open: Fed's reality check

    A trader reacts as a screen displays the Fed rate announcement on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., December 13, 2023. 

    Brendan Mcdermid | Reuters

    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.

    What you need to know today

    Markets start week lower
    U.S. stocks started the shortened week lower on Tuesday as investors closely watched fourth-quarter earnings, while tracking an uptick in Treasury yields after a Federal Reserve official said the central bank’s interest rate cutting cycle could be slower than what Wall Street expected. European stocks ended the session lower, with fashion brand Hugo Boss tumbling 9% after lower than expected earnings.

    Slower pace of Fed cuts
    Federal Reserve Governor Christopher Waller said there will be monetary policy loosening this year but the central bank could do it at a slower pace. “In many previous cycles … the FOMC cut rates reactively and did so quickly and often by large amounts.” For this cycle, he said, “I see no reason to move as quickly or cut as rapidly as in the past.”

    China’s growth
    Speaking at the at the World Economic Forum in Davos, Switzerland, Chinese Premier Li Qiang said China’s economy grew by around 5.2% in 2023 — slightly better than the official target of around 5%. It comes as Beijing is set to release official GDP numbers on Wednesday. A Reuters poll also forecasts 5.2% growth for China in 2023. Premier Li also said innovations in technology shouldn’t be used as means to contain or restrict other countries.

    More Big Bank earnings
    Goldman Sachs and Morgan Stanley reported earnings on Tuesday, wrapping up results for Wall Street’s biggest six lenders. Morgan Stanley’s fourth quarter revenue topped analysts’ estimates but the bank warned of economic and geopolitical risks. Goldman Sachs exceeded expectations, boosted by higher asset and wealth management revenue.

    [PRO] The hunt for quality stocks
    Markets have cooled off from the massive gains in the latter part of 2023. Amid this loss of momentum, the pros say investors must look toward quality names. Quality stocks are defined as those that have robust earnings, low debt and a stock price that’s less likely to be impacted by a broad market selloff.

    The bottom line

    Wall Street returned for the first day back after a long weekend, only to be rudely awoken by a reality check from a Fed official.

    The blue-chip Dow Jones Industrial Average closed 0.62% lower, while the S&P 500 dropped 0.37%. The tech-heavy Nasdaq Composite ended with a 0.19% dip.

    Federal Reserve Governor Christopher Waller said there’s “no reason” for the central bank to “move as quickly” in its approach to lower interest rates this year. His comments were in sharp contrast to the aggressive policy loosening that markets are expecting this year.

    Traders still see a more than 64% chance of the Fed cutting interest rates by 25 basis points to 5%-5.25% range at its meeting in March, according to the CME Group’s FedWatch tool. Those bets came down substantially from a near 77% chance of rate cuts on Friday, when data showed producer prices unexpected dropped in December.  

    Looking across the Atlantic, the World Economic Forum in Davos saw plenty more discussions on the second day.

    Artificial intelligence remained a hot topic, with Microsoft CEO Satya Nadella advocating for its uses, noting that more countries are now talking about AI in similar ways.

    “I think [a global regulatory approach to AI is] very desirable, because I think we’re now at this point where these are global challenges that require global norms and global standards,” Nadella said.

    Microsoft is a big player in the AI arms race.

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