Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, USA, December 1, 2023.
Brendan McDiarmid | Reuters
This report is from today’s CNBC Daily Open, our international markets newsletter. The CNBC Daily Open brings investors all the information they need to know, wherever they are. Like it? Subscribe. here.
Market record high
The S&P 500 and Nasdaq Composite Index closed at record highs as investors awaited inflation data to gauge the direction of U.S. monetary policy. Apple extended its gains after closing at a fifth consecutive record high, and Nvidia also rose, but the Dow Jones Industrial Average was slightly lower. Yields on the 10-year Treasury note were little changed and U.S. crude oil prices fell as Tropical Storm Beryl made landfall.
Elliott’s Proxy Fight Threats
Activist investor Elliott Management has threatened to launch a proxy fight against Southwest Airlines unless the airline’s board agrees to negotiate a management change. Elliott is seeking the removal of CEO Bob Jordan and board chairman Gary Kelly, citing poor performance and culture issues. The investor claims the board’s recent actions, including the introduction of poison pills and expanding the board, are “camp-solidification tactics.” Elliott welcomes cooperation but plans to give shareholders a say in management changes if the board does not respond.
Corning AI Pop
Corning shares rose 12% on Monday, their biggest gain since March 2020, after the company raised its second-quarter outlook. The company attributed the rise to increased demand for optical connectivity products that support generative AI networks. “We’ve invented new fiber, new cable, new connectors and new custom integrated optical solutions to dramatically reduce installation costs, overall time and space, and carbon emissions,” Corning CEO Wendell Weeks said on CNBC’s “Squawk Box.”
German Bitcoin Sellers
The German government has sold hundreds of millions of dollars worth of Bitcoin, which has led to the recent drop in the cryptocurrency’s price. Police in the eastern German state of Saxony seized nearly 50,000 Bitcoin in mid-January, which was valued at about $2.2 billion at the time of the seizure. Despite selling $379 million worth of Bitcoin in recent weeks, the German Federal Criminal Office still holds about 32,488 Bitcoin, worth about $1.9 billion at current prices.
Boeing plea deal
Boeing has agreed to plead guilty to criminal fraud in connection with the fatal 737 Max crashes. The plea agreement, pending court approval, will see Boeing listed as a felony offender but avoid a trial. The company will pay a $243.6 million fine and an independent compliance monitor will monitor the company’s operations for three years. The conviction could affect Boeing’s ability to sell products to the U.S. government, but it could also seek a waiver.
[PRO] Beryl Risk
Tropical Storm Beryl’s landfall in Texas has raised concerns about the upcoming hurricane season and prompted Wall Street analysts to scrutinize insurance stocks that could be most exposed to future storm damage.
As the S&P 500 continues to climb, including hitting its 35th record high this year, Oppenheimer’s chief investment strategist John Stoltzfus raised his target for the S&P 500 to 5,900, the second-highest on Wall Street. But caution is growing. Goldman Sachs trader Scott Rabner is wary of a market correction. He believes the market, himself included, has been overly optimistic.
Rubner isn’t alone in his concerns. Investors are increasingly questioning the huge amounts of money being poured into artificial intelligence. Roger McNamee, managing director at Elevation Partners, warned that investors may want to find a “safe landing spot” because AI’s end use may not justify the investment.
“I think Microsoft is investing about $10 billion a month in data centers, and the industry as a whole is putting in about $15 billion. They need roughly $600 million in revenue to justify what they’re putting in,” McNamee said.
“We’re making unproven assumptions about what this technology can do and applying it in places where it may not work. If that’s true, the craze will be over and all the major stocks in the S&P 500 will be significantly affected.”
Ed Yardeni, president of Yardeni Research, described the market as in a “slow-motion surge.” Yardeni said he seems to believe the Fed would soon cut interest rates if the economy slowed significantly or fell into a recession.
Market direction could become clearer this week, with Federal Reserve Chairman Jerome Powell due to testify before Congress on Tuesday and Wednesday, and key inflation data due to be released on Thursday that could influence interest rate expectations.
Former Dallas Federal Reserve President Robert Kaplan expects the Fed to cut interest rates in September.
“If I was sitting in my old seat, I would be preparing to cut rates in September,” Kaplan said Monday on CNBC’s “Squawk Box.” “I’m not going to commit to anything between now and then, but I think the Fed will be poised to cut rates in September and then do so at every meeting thereafter.”
—CNBC’s Jeff Cox, Brian Evans, Pia Singh, Scott Schnipper, Leslie Josephs, Katie Bartlett, Ryan Brown, Fred Imbert, Spencer Kimball and Rohan Goswami contributed to this report.
