Bhinneka News Online: CNBC Daily Open: The U.S. economy gives conflicting signals

Thursday, 9 February 2023

CNBC Daily Open: The U.S. economy gives conflicting signals

Thursday February 09 2023

U.S. stocks drop as the Treasury yields widen their inversion. The U.S. economy gives conflicting signals.

Markets

S&P500 Close

4,081.50

-0.88%

S&P500 Futures

4,096.75

+0.12%

10Y Treasury

3.664%

UNCH

As of THU, FEB 09, 2023 • 06:21 ET

What you need to know today

U.S. stocks closed lower Thursday, giving up a midday rally. The Nasdaq saw the biggest loss of the major indexes, dropping 1.02%. Asia-Pacific largely fell on Wednesday, though Chinese markets beat the trend and rose.

Disney CEO Bob Iger said he plans to stay at the media giant for only two years, during which he'll focus on strengthening its streaming business. Pleased by Disney's restructuring plan, activist investor Nelson Peltz declared his proxy fight with the company over.

Speaking of activists, Dan Loeb's hedge fund Third Point is the latest activist investor to take a stake in Salesforce, CNBC confirmed. It joins ValueAct Capital, Elliott Management and Starboard Value. Salesforce has been hit recently by slowing revenue growth and criticism that it paid too much for targets such as Slack.

Another day, more massive tech layoffs: Yahoo said it will push out more than 20% of its workforce by the end of the year. The company starts the process this week by cutting 1,000 jobs.

PRO Microsoft's artificial intelligence product demonstrations this week may have impressed investors more than Google's did, but analysts say that Google could still dominate AI eventually.

The bottom line

Boon Ping Yeo |

Thursday February 09 2023

The January rally seems to be fizzling as investors process the strange state of the U.S. economy.
Weekly jobless claims in the U.S. hit 196,000 for the week ending Feb. 4. Though it's an increase of 13,000 from the prior week, it's still one of the lowest numbers historically. Yet the number is more than what analysts expected and runs contrary to January's jobs data, which reported record low unemployment.

Despite a strong labor market, the Treasury yield curve remains inverted — meaning the yield on the 2-year Treasury exceeds that of the 10-year Treasury. On Thursday, the inversion widened. That usually indicates investors are worried about market conditions in the near term, and it sometimes signals a recession.

Those economic signals, in combination with the Federal Reserve's continuing, hawkish tones, seemed to give investors pause. On Thursday, U.S. stocks continued their two-day losing streak. The Dow Jones Industrial Average lost 0.73% and the S&P 500 fell 0.9%. The tech-heavy Nasdaq Composite, weighed down by a 4% slide in Google-parent Alphabet and a 3% decline in Meta, dropped 1.02%.

Until economic data paints a more coherent picture of the U.S. economy, it's likely that markets stay choppy.