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
Rally halted
U.S. markets closed in the red Tuesday, halting a rally that drove stocks to their highest levels in more than a year. Following Wall Street, Asia-Pacific markets mostly fell Wednesday. Japan's Nikkei 225 was the only major index to advance, gaining around 0.7%, while Hong Kong's Hang Seng Index was the worst performer, losing close to 2% as Hong Kong-listed Alibaba shares sank 3.45%.
Thali for dinner
India's Prime Minister Narendra Modi will be hosted by U.S. President Joe Biden at a White House state dinner Thursday. Joining Biden are business leaders like Apple's Tim Cook, Alphabet's Sundar Pichai, Microsoft's Satya Nadella and FedEx's Raj Subramaniam. The dinner symbolizes the White House's — and corporate America's — turn to India at a time when U.S.-China ties are fraying.
Turbocharged investment
Nio, a Chinese electric vehicle company, said it received a $738.5 million investment from CYVN Holdings, a fund owned by the Abu Dhabi government. That deal, which was priced at $8.72 a share, gives CYVN a 7% stake in Nio. In recent months, deals between China and the Middle East have been increasing in number.
Grab and (let) go
Grab, a Singapore-based ride-hailing and food delivery app, is laying off 1,000 employees, or around 11% of its total workforce. Grab CEO Anthony Tan said the layoffs were not executed as "a shortcut to profitability." In September, Grab's COO Alex Hungate told Reuters the company had not reached the "desperate" point of conducting mass layoffs because it was "judicious about any hiring."
[PRO] Squeezing out squeezed profits
Corporate profitability has probably hit the bottom. But companies aren't likely to increase their profits in the next 12 months because of slowing price hikes and higher interest rates, according to a Goldman Sachs analysis. Still, Goldman found a basket of stocks that might defy the odds and expand their margins.
The bottom line
The long weekend, it seems, gave investors space to gather their wits on the state of the stock market, resulting in a slight pullback when trading reopened Tuesday.
The S&P 500 declined 0.47%, the Dow Jones Industrial Average lost 0.72% and the Nasdaq Composite slipped 0.16%. That's the second day in a row that all three major indexes have closed lower.
But there hasn't been any concrete events that might cause traders to lose hope in the rally. Here, I use the word "hope" deliberately — since market activity is as dependent on intuition, which can be arbitrary, as it is logic.
Indeed, Mike Wilson, chief U.S. equity strategist at Morgan Stanley, thinks the slowdown in stocks is simply because the fear of missing out is losing steam. ″[We] believe equity markets are as stretched as they can get with market participants wary of missing a potential new bull market," writes Wilson.
That is to say, the reality of higher rates for longer, and a slowing economy, will soon show up in lower earnings and dampen stocks' ebullience.
Still, the S&P has defied expectations to rise 14.5% so far this year. If history is any indication, CNBC's Jeff Cox writes, the index might jump a further 8% in the second half of the year, according to data cited by CFRA.
But I should note here that 2023 has been rather anomalous for markets, historically speaking. Perhaps intuition might turn out to be a better guide than logic this year.
