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
Powell says inflation is too high
Federal Reserve Chair Jerome Powell said the central bank would be "resolute" in its commitment to its 2% mandate, despite acknowledging recent signs of cooling inflation. Still, Powell didn't commit to a specific policy path and gave no indication that he was leaning toward a push higher for interest rates. Â
Shaky markets
Stocks slid on Thursday, with the Dow down over 250 points after Powell's speech. The benchmark 10-year U.S. Treasury yield crossed the key level of 5% for the first time since 2007. Asia-Pacific markets were all lower on Friday, with South Korean stocks leading declines.
Disneyland or Disney World?
Disney highlighted in a filing just how strong its theme park business is for its bottom line. The theme parks segment had more than $24 billion in revenue for the nine months ended July 1. That's 17% higher than the comparable year ago period. Admissions alone accounted for nearly $8 billion of 2023′s nine-month total, up 21% from last year.
Las Vegas Sands' Asia bet
The world's largest casino company's recovery from the Covid-19 pandemic is gaining steam, and Asia is a big reason why. Las Vegas Sands announced it pulled in $1.12 billion in third-quarter adjusted property EBITDA, an important gauge of profitability in the gambling industry. That's nearing pre-pandemic levels, off just 6% from the same period in 2019.
[PRO] Should you lock in those high yields right now?
A bond bear market has dominated this year. But with 10-year Treasury yields surging to 5% — a 16-year high, many investors might now be tempted to lock in those high yields and buy into bonds. Volatility in the bond market may, however, cause some hesitation among investors. Wall Street weighs in on the right moves to make.
The bottom line
Stock markets have had a rough run this week as fears of inflation and high Treasury yields linger. There's no two ways about where the Federal Reserve stands on its battle against rising prices as Chair Jerome Powell firmly backed the central bank's 2% target, adding that he doesn't think rates are too high now.
"Does it feel like policy is too tight right now? I would have to say no," he said.
Recent data has shown that while U.S. inflation remains well above the target rate, the pace of monthly increases has decelerated, but evidently not fast enough by Fed standards.
To top it all off, the yield on the 10-year Treasury bond notched above 5% as it rose for the fourth day in a row, pressuring equity markets further.
High bond yields pressure equity markets because stocks are traditionally looked at as riskier assets that can sometimes provide higher returns, while bonds stand to provide a steady, less-risky source of regular income.
These high interest rates have also pressured some of the largest and most profitable banks in the United States as big Wall Street lenders have quietly been laying off workers all year — and some of the deepest cuts have yet to come.
"Banks are cutting costs where they can because things are really uncertain next year," Chris Marinac, research director at Janney Montgomery Scott, said. "They need to find levers to keep earnings from falling further and to free up money for provisions as more loans go bad."
In the same vein, Tesla CEO Elon Musk expressed concerns about the high interest rate environment and said it makes it harder for consumers to buy cars, sending shares of the EV maker down over 9% on Thursday.
Netflix on the other hand, surged 16% on Thursday following an encouraging quarterly earnings report and several victories, including a 70% jump in its new ad-supported subscription tier.
Investors will now look for results from companies including Comerica, Regions Financial and American Express. Oilfield services company SLB is also on deck to report.
