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
Markets' tech-powered surge
U.S. markets traded higher Monday. The Nasdaq Composite rallied, buoyed by tech stocks. Despite Wall Street's gains, Asia-Pacific stocks were mixed Tuesday. Japan's Nikkei 225 rose 0.75%, but Hong Kong's Hang Seng Index fell around 0.2%. Even Country Garden Holdings shares popping 4.85% on extensions for its bond repayments couldn't lift the HSI to positive territory.
'A huge mistake'
JPMorgan Chase CEO Jamie Dimon said it'd be "a huge mistake" to think the U.S. economy will boom for years. The economy's currently supported by a strong consumer, but tighter monetary policy, the Ukraine war and governments "spending like drunken sailors" pose risks. "Things change, and we don't know what the full effect of all this is going to be 12 or 18 months from now," Dimon said.
Back to Qualcomm
Qualcomm shares jumped nearly 4% after the company said it will supply Apple with 5G modems for smartphones through 2026. Qualcomm's CEO Cristiano Amon previously said Apple's transitioning to an in-house chip from 2024. Apple contributed about 21% of Qualcomm's fiscal 2022 revenue of $44.2 billion, according to a UBS estimate.
More than luck to surpass Starbucks
Ask any American to think of the most common coffee chain, and chances are they'd mention Starbucks. But in China, the name that'll crop up most is Luckin Coffee. It now has 10,829 stores in China, compared with Starbucks' 6,480. A combination of its franchise model, low pricing and self-operated stores helped a coffee chain founded in 2017 surpass an established brand.
[PRO] Not the ripe time to short Apple
Apple shares lost around $200 billion last week on news that China is imposing restrictions on iPhone use in government agencies. Even so, the tech giant's valuation is still sky-high. But a notable Apple bear says he's not shorting the stock — just yet. Here's why he's waiting for the right moment to do so.
The bottom line
Technology stocks staged a comeback, helped by a barrage of good news.
Tesla surged more than 10% after Morgan Stanley upgraded the stock. Meta popped 3.25% as the Wall Street Journal reported the company's developing a new artificial intelligence system as advanced as OpenAI's model. Qualcomm jumped almost 4% on the news that it will continue supplying Apple with modems through 2026.
Those moves supercharged the Nasdaq Composite, giving it a 1.14% increase. The S&P 500 rose 0.67% and the Dow Jones Industrial Average added 0.25%, helped by a 1.2% rise in Walt Disney shares after the media giant reached a deal with Charter Communications.
Notably, tech stocks rallied even as the 10-year U.S. Treasury yield climbed around nine basis points to 4.294%. Higher bond yields typically weigh down growth-focused tech stocks because they increase the cost of borrowing and lower the value of future earnings. But tech stocks defied that relationship Monday.
"As investors become more comfortable with a higher rate environment, yields on 10-year Treasuries may not need to fall back into the 3′s for longer duration assets to work," Goldman Sachs wrote. "Indeed, yields on 10-year Treasuries ranged between 4.5% and 7% back in the late-1990′s in the years when the Nasdaq posted significant outsized gains (CPI inflation was also in a similar range as today, if not lower)," the note continued.
Still, traders might not need to worry about yields hitting an eye-opening 7%, going by a report in the Wall Street Journal. It said Federal Reserve officials are feeling less urgency to raise interest rates as inflation cools down. Separately, Chairman of Forbes Media Steve Forbes told CNBC he thinks "the Federal Reserve is not going to increase interest rates in the next few months." If true, that means it's unlikely yields will rise too dramatically, giving stocks more room to breathe.
That's a big "if," however. The consumer and producer price indexes, coming out later this week, will put that hypothesis to the test.
