U.S. Federal Reserve Board Chairman Jerome Powell participates in a panel discussion at the 24th Jacques Polak Annual Research Conference on November 8, 2023 in Washington, DC.
Alex Wong | 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
Fed Chair Powell says too ‘premature’ to cut rates
Federal Reserve Chairman Jerome Powell said Friday it was too early to declare victory over inflation and beat back on market views for interest rate cuts next year. “It would be premature to conclude with confidence that we have achieved a sufficiently restrictive stance, or to speculate on when policy might ease,” Powell said in prepared remarks. Markets perceived his comments as dovish, sending stocks higher and Treasury yields sharply lower.
S&P 500 soars to 2023 high
The S&P 500 rose 0.59% Friday and closed at a new high for 2023, extending a strong rally from November. The Nasdaq Composite ended 0.55% higher, while the Dow Jones Industrial Average added 0.82%. The benchmark index closed at its highest level since March 2022 as investors were hopeful that that the Fed might be done with raising interest rates. Europe’s Stoxx 600 closed 1% higher Friday after finishing its best month since January.
A $1.9 billion regional airlines deal
Alaska Airlines has agreed to buy rival Hawaiian Airlines in a $1.9 billion deal as the carriers make a push to expand along the West Coast. Alaska would pay $18 a share for Hawaiian and would take on $900 million of its debt, the companies said Sunday. The deal could also draw another potential regulatory battle in the second proposed airline merger in less than two years.
Uber gets a spot in the S&P 500
Uber will be added to the S&P 500 Index, replacing Sealed Air Corp. The change will take place prior to the open of trading on Dec. 18. The ride-hailing company made its delivery business profitable faster than expected, while growth in advertising revenue has also contributed to Uber’s profitability.
[PRO] China’s version of Spotify is ‘underappreciated,’ Morgan Stanley says
Tencent Music Entertainment “music value [is] still underappreciated,” Morgan Stanley says even as the company is convincing more people in China to pay for music. The company’s online music subscribers topped 100 million in the July-to-September period, for the first time since it listed in the U.S. in late 2018.
The bottom line
Wall Street is off to a solid start this December, with the major averages recording their fifth straight week of gains on Friday.
This comes on the back of November’s spectacular rally which saw markets snapping a three-month losing streak, driven by bets that the Fed may just be done with raising rates and could even start cutting them as soon as the first half of next year.
There was, however, pushback from Fed Chair Jerome Powell, calling the talks of cuts “premature”. But stock markets took heart from what traders perceived as a clearly dovish message from the central bank chief.
“There’s a trifecta of drivers here. The first is the inflation. Second is the Fed seeming like it may be stepping to the sidelines, and the third is this cooling in the economy that is starting to unfold, but at a very gradual pace,” said Mona Mahajan, senior investment strategist at Edward Jones.
“It’s almost like a Goldilocks cooling. It’s not too hot. It’s not too cold. And that’s exactly what markets are embracing.”
Powell’s remarks cemented views that the Fed is at least done raising rates. Powell also noted that inflation was “moving in the right direction.”
Fed’s meeting on Dec. 13 will help clear the air on its interest-rate plans.