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
Mixed markets
U.S. stocks started the week on a positive note, thanks to a rebound in chipmakers — Nvidia's shares popped 7% to hit $437.43. Asia-Pacific markets traded mixed Tuesday. Japan's Nikkei 225 rose more than 0.8% after the country reported better-than-expected economic growth. Conversely, China's Shanghai Composite fell nearly 0.3% on disappointing economic data.
Faltering Chinese economy
China's July retail sales, industrial production and real estate investment all fell from a year ago and were markedly below analysts' expectations. China's National Bureau of Statistics did not release youth unemployment figures — which soared to a record 21.3% last month — citing economic and social changes. The country's central bank also unexpectedly cut key policy rates to boost the economy.
Booming Japanese economy
Japan's economy grew an annualized 6% in the April-June quarter, almost two times the 3.1% economists had expected. On a quarter-over-quarter basis, the world's third-largest economy grew 1.5%, which was also nearly two times the 0.8% forecast. However, beneath the rosy headline figure, private consumption expenditure dropped an annualized 0.5%.
Fourth indictment for Trump
Former U.S. President Donald Trump was indicted by a grand jury in Georgia on Racketeer Influenced and Corrupt Organizations charges. The charges stem from a long-running criminal investigation into the efforts made by Trump and his allies to overturn President Joe Biden's victory in Georgia's 2020 presidential election.
[PRO] China alternatives
"China has disappointed," said a portfolio manager at Allspring Global Investment. China's economy has quickly fizzled out from its post-reopening boom; likewise its financial markets. These are the global markets and stocks the pros are flocking to as they flee China.
The bottom line
Technology stocks and chipmakers helped major U.S. indexes regain their footing after ending last week in the red. The S&P 500 gained 0.58%, the Dow Jones Industrial Average inched up 0.07% and the Nasdaq Composite advanced 1.05%.
While that's just a single data point, yesterday's positive market movement echoes Oppenheimer chief investment strategist John Stoltzfus' argument that the last two week of losses didn't signal the end of the bull market. Rather, it was "a pause that refreshes" — a healthy adjustment to "oversold market conditions," Stoltzfus wrote.
Still, stocks face pressure from rising bond yields. The two-year U.S. Treasury yield is a hair's breadth away from 5% while the 10-year yield is 4.2% — pretty healthy returns for a risk-free investment. "Fixed income just looks relatively attractive, especially [relative to] where [we] were just a couple of years ago," said Kevin Gordon, senior investment strategist at Charles Schwab.
At the same time, higher yields mean lower prices. That "creates the opportunity to buy bonds at a real rate that we haven't seen in well over a decade," Ashish Shah, chief investment officer of public investing at Goldman Sachs Asset Management, told CNBC.
The tussle between stocks and bonds, however, seems a pretty good problem to have. Recent data show both inflation receding and the U.S. economy expanding more than forecast. Whatever choice investors make, then, it's made under a backdrop of heathy conditions — something rare since the pandemic.
Or, as Adam Crisafulli, founder of market intelligence firm Vital Knowledge, put it, "We don't think investors should dive too far down rabbit holes of despair."
