This report is from today’s CNBC Daily Open, our 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
Wall Street ends mixed
U.S. stocks closed mixed on Wednesday with tech stocks leading the charge. The S&P 500 hit another record high, while the tech-heavy Nasdaq Composite also closed higher, boosted by the tech rally. But the blue-chip Dow Jones Industrial Average ended in the red, dragged by declines of more than 2% in Verizon and 3M a day after each reported earnings. Fourth-quarter U.S. GDP data is due onThursday, which is expected to show the economy is at the crossroads.
FAA halts Boeing’s 737 Max production expansion
The Federal Aviation Administration halted Boeing‘s plans to expand 737 Max production to improve quality control. Boeing’s shares slipped 1.2% in after-hours trading following the FAA’s announcement. But the regulator did clear a path for grounded Max 9 jets to resume flights after a midair incident on Jan. 5.
Tesla’s earnings disappoint
Tesla reported fourth-quarter earnings that missed estimates as automotive revenue increased just 1% from a year earlier. The electric vehicle maker also issued a downbeat full-year production outlook. The weak guidance weighed on the stock, which dropped nearly 6% in extended trading. As of Wednesday’s close, Tesla shares have fallen about 16% so far this year after more than doubling in 2023.
First alcohol store opens in Saudi Arabia
Saudi Arabia opened its first alcohol store in the diplomatic quarter of its capital Riyadh, two sources told CNBC. While the news hasn’t been officially confirmed, it will be seen as a major breakthrough for the highly conservative Muslim nation where alcohol has been banned since 1952.
[PRO] Health care no longer a laggard.
The health-care sector “has shrugged off the title of being a notable laggard in 2023,” Citi analysts said in a recent note. They have cited biotech in particular as one of a few areas to watch. Growth stocks such those in tech and biotech are seen as mostly benefitting from Fed rate cuts.
The bottom line
All eyes will be on the state of the U.S. economy as the first official reading of fourth-quarter GDP data drops Thursday morning.
Wall Street will be parsing the details for signs on the health of the economy. Although economists no longer see a recession on the horizon, some suspect the pace of real GDP growth will moderate in the coming quarters.
The consensus outlook is for economic growth to come in at an annual rate of 2% in the fourth quarter, a slowdown from 4.9% in the third. This will be the lowest reading since the 0.6% decline in the second quarter of 2022.
“Data released [Thursday] may in retrospect turn out to document the one quarter of true ‘Goldilocks’ conditions,” Citi economist Andrew Hollenhorst wrote. “But we do not share the market and Fed’s sanguine assessment of the macroeconomy over the remainder of the year.”
In a recent commentary, Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote the actual GDP data may hold some surprises as forecasts could sometimes be thrown off by late-arriving data.
Since 2016, a slew of government data was published the day before the GDP report — namely, information on business inventories and trade, which are part of the GDP calculation. But those are now scheduled to be released at the same time as Thursday’s report.
“The GDP numbers have much greater potential to surprise than will be appreciated by investors without pre-2016 experience,” Shepherdson said.
Whatever the numbers, investors will chew over the data to gauge what direction the Fed will take in its anti-inflation fight.
— CNBC’s Jeff Cox contributed to this report.
