Signage is displayed outside the Broadcom offices on June 7, 2018 in San Jose, California.
Justin Sullivan | 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
India overtakes Hong Kong
India surpassed Hong Kong to become the seventh largest stock market in the world. As of November, the total market capitalization of the National Stock Exchange of India was $3.989 trillion compared with Hong Kong’s $3.984 trillion, according to the World Federation of Exchanges. What’s more, India’s Nifty 50 index’s up 16%, while Hong Kong’s Hang Seng index’s has lost 17% so far this year.
The Fed will be slow
Michael Milken, the investor famed for leverage buyouts, thinks the U.S. Federal Reserve will move slowly on monetary policy. “My view right now is the Fed is probably going to err a little bit on discipline today to see what’s occurred,” he said, adding the central bank cut rates too quickly in the ’70s, which led to a resurge in inflation.
Bitcoin volatility
After bitcoin broke the $44,000 barrier last week for the first time since April 2022, the cryptocurrency fell around 5% to $41,611.00, hitting a low of $40,300 at one point during Sunday night. Ether, Solana’s SOL and Ripple’s XRP also dropped around 7%. Despite its recent slide, analysts expect bitcoin to have plenty of juice in the tank because a spot bitcoin exchange-traded fund seems to be on its way.
[PRO] AI predicts the S&P
After rallying for much of November, the S&P 500 hit 4,604.37 last week, a new high for 2023. Does this signal continued strength in the broad-based index, or is the 4,600 level a threshold stocks cannot surmount convincingly? HSBC Global Research used artificial intelligence to analyze the language used in recent earnings calls to predict where the S&P’s headed next.
The bottom line
Major U.S. indexes closed slightly higher Monday. The S&P 500 advanced 0.39%, the Nasdaq Composite climbed 0.2% and the Dow Jones Industrial Average rose 0.43%. Statistically, however, those are impressive moves: The S&P and Nasdaq are continuing a six-week winning streak, while the Dow closed at its highest level since January 2022.
Investors have (the hype over) artificial intelligence to thank — in part, at least. While AI-frontrunner Nvidia slumped more than 2% Monday, Broadcom shares popped 9% after Citi resumed coverage on the semiconductor maker, rating it a “buy.”
“We believe its AI business will offset the correction in the semi business,” Citi analyst Christopher Danely wrote about Broadcom.
That glowing review helped boost other semiconductor stocks as well. AMD advanced 4.26%, while the iShares Semiconductor ETF added 3.41% and the VanEck Semiconductor ETF rose 2.4%.
Another factor helping stocks is moderating inflation expectations. A New York Federal Reserve survey showed respondents, on average, expect inflation to drop to 3.4% in a year, the lowest since April 2021. That optimism echoes the University of Michigan’s Consumer Sentiment reading.
Still, anticipating inflation to fall in a year doesn’t mean the U.S. Federal Reserve will cut rates as hastily as investors hope. Market watchers think the Fed will almost certainly keep rates unchanged at its Wednesday meeting — and there’s only a 46.5% chance the central bank will cut rates by a quarter percentage point in March, according to the CME FedWatch Tool.
With the consumer and producer price reports coming out later this week, that assessment’s subject to change too.
“No one expects a hike, but hotter-than-expected inflation readings could throw cold water on the idea that rate cuts are coming sooner rather than later,” said Chris Larkin, head of trading and investing at E-Trade.
In such a busy week, perhaps it’s better to adopt a wait-and-watch approach, despite the recent rally in stocks.