Traders work on the floor of the New York Stock Exchange (NYSE) on October 30, 2023 in New York City.
Spencer Platt | Getty Images News | Getty Images
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.
What you need to know today
Big Tech earnings
The S&P 500 and Nasdaq Composite edged higher on Monday ahead of a busy week for Big Tech earnings with investors also awaiting the US central bank’s policy announcement on Wednesday. The S&P 500 closed 0.08% higher while the Nasdaq Composite gained 0.07%. The Dow Jones Industrial Average lost 0.12%. Treasury yields fell and US oil prices fell amid tensions between Israel and the Iran-backed Hezbollah militia in Lebanon.
I miss McDonald’s
McDonald’s quarterly earnings and revenue fell short of analysts’ expectations as same-store sales fell globally for the first time since 2020. The fast-food giant’s second-quarter net income fell to $2.02 billion from $2.31 billion a year ago, while revenue was roughly flat. flat at $6.49 billion. The company says it’s working to create value for customers who consider prices too high, and its $5 meal promotion recently launched in the U.S. is bringing low-income diners back to its stores. McDonald’s shares closed 3.74% higher.
Apple AI
Apple has released the first version of Apple Intelligence to registered developers, but the long-awaited AI software may not be loaded into the next batch of iPhones. The new software was found in the iOS 18.1 developer beta, while iPhones launched this fall are scheduled to run on iOS 18. The launch of Apple Intelligence is expected to lead to a wave of mobile phone upgrades as the system only works on high-end iPhone models such as the iPhone 15 Pro and iPhone 15 Pro Max.
Bitcoin is retreating
Bitcoin fell more than 1% on Monday as investors digested comments made by Republican presidential candidate Donald Trump at the Bitcoin Conference over the weekend. The cryptocurrency is trading at $67,264 after rising as high as $69,982, according to Coin Metrics. Trump said officials had damaged the industry by not providing proper rules and regulations, and that he would replace Securities and Exchange Commission Chairman Gary Gensler “on day one.”
(PRO) Locks in higher results
Janus Henderson said investors who have put their savings in money market funds should lock in the day of higher yields by switching to bond ETFs, amid signs that the Fed will start cutting interest rates this year. Bond investors benefit from price appreciation in a falling interest rate environment because bond prices and bond yields move toward each other.
Bottom line
McDonald’s shares rose despite Wall Street’s expectations, but the fast food titan was an exception.
According to financial information provider FactSet, companies with disappointing quarterly results will be penalized more than usual this earnings season.
Companies that missed second-quarter earnings estimates saw an average drop of 3.8% in their stock prices during the five-day period that began two days before the results were released. That compares with a five-year average price decline of 2.3% during the same window for companies that disappointed Wall Street.
The Street beat saw only a 0.3% gain over the same period, compared to a five-year average gain of 1%.
This phenomenon underlines the high expectations of the season as well as concerns about the overheated stock market after a strong rally so far this year.
Signs of slowing consumer demand can also be seen in the auto industry, where analysts are warning of tougher times ahead for Detroit’s Big Three. Shares of Ford, GM and Stellantis came under pressure after the release of second-quarter results.
Analysts say the U.S. market — a profit engine for most automakers — is normalizing after years of record high prices, low vehicle inventories and resilient demand. Inventories, especially for Detroit automakers, are rising, while vehicle prices are slowly falling.
— CNBC’s Yun Li and Michael Wayland contributed to this report.