People walk near the Nasdaq building in Times Square on January 24, 2023 in New York City.
Eduardo Munoz-Alvarez | View Press | Getty Images
This report is from today’s CNBC Daily Open, our new newsletter for international markets. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Do you like what you see? Here you can sign up.
Markets could be warming up for growth stocks. And maybe they shouldn’t be.
- US stocks closed mixed on Friday. The Dow Jones Industrial Average was the only major index to rise. Asia-Pacific markets fell across the board, with Hong Kong’s Hang Seng index down 1.25%
- Global oil demand will pick up significantly in 2023 due to the recovering Chinese economy, the International Energy Agency predicted. This could upset the current “balance” in oil markets.
- US-China relations remain strained, but at least they are talking. Foreign Minister Antony Blinken met with China’s top diplomat Wang Yi during the Munich Security Conference. Blinken said they had a “very direct, very clear” conversation about China’s infamous spy balloon. He added that Wang did not apologize for the incident.
- PROFESSIONAL Retail investors are flocking back to the stock market, investing an average of $1.51 billion a day, according to Vanda Research. These are the stocks that are most popular with them.
Stocks in the US ended the week slightly lower. The Dow was up 0.39% on Friday. But it fell 0.13% this week, the first time it has lost ground in three consecutive weeks since September. The S&P 500 slipped 0.28%, giving it a two-week losing streak. The Nasdaq Composite fell 0.58% but was up 0.59% for the week, its sixth positive week in seven.
Which brings us to the curious relationship between business and markets today. A widely accepted rule on Wall Street is that the Nasdaq, replete with tech stocks whose value depends on future earnings, is the most sensitive to interest rates. Still, it’s the only index to have had a positive week, despite signs — including three-month highs in Treasury yields — that rates could end up higher than the Federal Reserve forecast. Meera Pandit, a strategist at JPMorgan, said this shows investors are overly optimistic about the markets and are putting money into forward-looking growth stocks. Maybe they shouldn’t be – Pandit warned that “this is likely the overheating before the economy retreated”.
We will have a clearer picture of the US economy this week. Earnings reports from retail giants Walmart and Home Depot will gauge consumer activity, while semiconductor company Nvidia will indicate whether the rally in tech stocks can continue. Minutes of the Fed meeting come out on Wednesday and on Friday we will see the personal consumption expenditure index, which is the Fed’s preferred gauge of inflation. Investors will be poring over the data to find out if the economy is in for a soft landing or a hard landing — or if it will continue to climb.
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