CNBC Daily Open: Recession concerns remain

This report is from today’s CNBC Daily Open, our international market newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. As you see? You can subscribe here.

Dow rises, others fall
The US market is trading mixed. At Dow Jones Industrial Average rose to touch new heights, but the S&P 500 and Nasdaq Composite fall. The pan-European Stoxx 600 index lost 1.42%, dragged down by car stocks which shed 3.6%. After cutting the 2024 guidance, Mercedes sank over 8% before giving losses to 1.6% at the end of the day.

Qualcomm taking over Intel?
Qualcomm recently approached Intel for a possible takeover. Whether talks are continuing or what the terms of a possible deal are are unclear, according to sources. Considering Intel’s market cap is more than $90 billion, the deal, if it happens, would be one of the largest technology mergers ever. Intel in recent years has struggled with its business.

Consideration of tariff cuts
US Federal Reserve Governor Christopher Waller said on Friday that he opted for a half-point rate cut because “inflation has softened faster than we thought.” Michelle Bowman, who voted for the quarter-point cut, said in a statement, “the Committee’s larger policy action could be interpreted as a premature declaration of victory” on inflation.

‘As needed’
Boeing workers entered the second week of the strike, and may continue for some time. One worker who spoke on the condition of anonymity said he had been saving for months — and “could last that long” to get a better labor contract from Boeing. The strikes cost Boeing about $50 million a day, according to aerospace analyst Ron Epstein.

(PRO) Testing momentum
Stocks rallied last week on the back of larger-than-usual interest rate cuts. The Dow Jones Industrial Average and the S&P 500 hit new highs. Whether he can maintain that momentum is another matter. A lot of data – such as the personal consumption expenditure index on Friday – this week will test stocks, writes CNBC Pro Sarah Min.

Markets seem to be accepting that the Fed’s supersized rate cut last week is because the central bank wants to keep the job market healthy.

Some doubters resurfaced on Friday.

FedEx shares plunged 15.2% after it reported first-quarter earnings that missed expectations. It’s not just bad news for companies and investors.

Cargo companies are seen as a bellwether for the economy. The higher the overall demand, the more shipping services are needed. Therefore, when FedEx missed its earnings estimates, one conclusion we can draw is that the economy is not as hot as expected.

Some analysts are also increasingly worried about the state of the economy and markets.

Piper Sandler’s chief global economist Nancy Lazar notes that the current easing cycle echoes that of 2001 and 2007, when the Fed’s first cut was also half a percentage point. But that first jumbo cut could not prevent the recession of the early 2000s and the global financial crisis.

“On average, it takes 10 quarters after the liftoff rate for the downturn to start. This is the 10th quarter. And given the size of the rate hike, and the drawdown of the Fed’s balance sheet, unemployment could reach 6%,” Lazar wrote.

In terms of financial markets, the financial company BTIG sees the possibility of a retreat. But optimistically “the weakness (is) likely to be more moderate than we think,” said chief market technician Jonathan Krinsky.

Indeed, even in S&P back 0.19% and on Nasdaq fell 0.36% on Friday, the Dow Eked out 0.09% Increase to new closing high. All three indices also ended the week in the green.

Last week’s euphoria was mostly fueled by anticipation and celebration of the Fed’s rate cuts. Markets this week will see hard data coming out, like preliminary PMI measures, consumer confidence and PCE reports. They will give you more clues as to whether the cut is really a recalibration, or a reaction.

– CNBC’s Alex Harring, Hakyung Kim and Brian Evans contributed to this story.