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
Hawkish Powell
In a speech that carried broad hawkish overtones, Federal Reserve Chair Jerome Powell said the U.S. central bank is "not confident" monetary policy is "sufficiently restrictive to bring inflation down to 2 percent." Still, Powell acknowledged there's a "risk of overtightening," and said "monetary policy is generally working the way we think it should work."
Streak shattered
All major U.S. indexes fell Thursday, which means the S&P 500 and Nasdaq Composite snapped their winning streaks. Asia-Pacific markets followed Wall Street lower Friday. Hong Kong's Hang Seng Index dropped about 1.5% and is poised to be the worst performing index for the week. The index's dragged down by Wynn Macau, which slumped more than 12% to its lowest level in nearly a year.
Tesla's just an auto company
Tesla shares sank 5.46% after HSBC Global rated the electric vehicle manufacturer as "reduce" and gave it a $146 price target — implying a drop of about 30% from Tesla's close at $209.98. Tesla has long tried to justify its share prices by portraying itself as a technology company. But HSBC analysts punctured that narrative, calling it a "very expensive auto company."
Mixed corporate fortunes in China
HSBC's analysts might be on to something. Chinese EV startup Li Auto sold a record 40,222 cars in October in China, far more than Tesla's 28,626, according to the Chinese Passenger Car Association. Separately, China's largest chipmaker SMIC posted an 80% plunge in net income to $93.98 million for the quarter ended September.
[PRO] India or China?
India, and China: The world's first- and second-most populous country, respectively. Both are economic giants that have yet to achieve their full potential, but hold promises for emerging market investors. CNBC Pro spoke to experts to find out which's the better market to invest in — and found that the pros overwhelmingly preferred one of them.
The bottom line
In a sign how much markets still see interest rates as their main driver, a few comments by Federal Reserve Chair Jerome Powell sent U.S. Treasury yields up and stocks tumbling.
"The Federal Open Market Committee is committed to achieving a stance of monetary policy that is sufficiently restrictive to bring inflation down to 2 percent over time; we are not confident that we have achieved such a stance," Powell said in a speech prepared for the Jacques Polak Annual Research Conference.
Commenting on Powell's speech, Jeffrey Roach, chief economist at LPL Financial, said "Chairman Powell issued a warning to investors too giddy on the prospect of rate cuts next year."
It wasn't just Powell who cast aspersions on near-term rate cuts. Fed Governor Michelle Bowman, in fact, said she expects rates to rise — but supported the central bank's decision earlier this month to keep them unchanged.
"There is an unusually high level of uncertainty regarding the economy and my own economic outlook, especially considering recent surprises in the data, data revisions, and ongoing geopolitical risks," said Bowman, who's a voting member of the Federal Open Market Committee.
U.S. Treasury yields shot up on those remarks and on the back of a Treasury auction, earlier in the day, that didn't garner much interest. The 10-year yield climbed more than 12 basis points to 4.634%.
Pressured by rising yields, stocks fell, defying investor hopes of a historic run. The S&P 500 slipped 0.81%, the Dow Jones Industrial Average declined 0.65% and the Nasdaq Composite lost 0.94%. (If the S&P had risen yesterday, it'd have a nine-day winning streak, the longest since November 2004.)
Despite the persistence of rising yields that's jolted markets in recent months, State Street Global Advisors' Michael Arone thinks stocks can finish the year on a high note.
"I do think that we're set up for a kind of a positive conclusion to what's been a positive year," the chief investment strategist said. But he acknowledged there's no escaping rate fears.
"But I do think that movements in interest rates will ultimately determine kind of where we head from here."
