CNBC Daily Open: Markets are pricing in the best of both worlds
A man stands on the floor of the New York Stock Exchange (NYSE) on March 23, 2023 in New York City.
Spencer Platt | Getty Images News | Getty Images
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.
Investor fears subside. Is it premature?
What you need to know today
- In the event of a bank rescue in the European Union, the EU will start by “absorbing equity stack, and then the AT1 and then the Tier 2 and then the rest,” Dominique Laboureix, chair of the EU’s Single Resolution Board, told CNBC in an exclusive interview.
The bottom line
Fears are subsiding and markets are rebounding. But it’d be too premature to celebrate — at least not until we find out how the economy’s doing from reports coming out soon.
Yesterday, all major indexes rose. The S&P 500 climbed 0.57%, the Dow Jones Industrial Average advanced 0.43% and the Nasdaq Composite added 0.73%. Investors continued flocking to technology stocks: Amazon rose 1.75%, Microsoft gained 1.26% and Netflix climbed 1.93%. “The Silicon Valley Bank fiasco was just the oxygen the tech bull needed to snap out of its funk and get back to work,” CNBC’s Jim Cramer said.
How do we know investors are regaining confidence, other than inferring their sentiment from market moves? We look at the CBOE Volatility Index. Derived from the price of S&P 500 options, the volatility index measures the market’s expectations of how the S&P will move over the next 30 days. Hence, it serves as a proxy of investors’ fears. Currently, it’s around levels last seen at the start of March, before SVB collapsed.
In other words, markets seem to be pricing in the best of both words: “a recession that allows rates to be low and brings inflation down sharply, yet one that does not have a massively negative effect on corporate earnings,” Ajay Rajadhyaksha, global chairman of research at Barclays, wrote in a Thursday note.
That might be premature, as Rajadhyaksha suggests. Yesterday’s jobless claims number, while reporting an increase, is still below what the Federal Reserve would like to see for the labor market to slow substantially. We’ll get more granular data on the economy with the release of the Personal Consumption Expenditures Price Index later today, and the March jobs report next week.
For now, though, it’s undeniably nice to have a respite from the banking crisis.
— CNBC’s Dan Mangan contributed to this report.
Subscribe here to get this report sent directly to your inbox each morning before markets open.
:max_bytes(150000):strip_icc():format(jpeg)/SECForm425-41087544bb054a868ccbeb13482beb63.jpg "What Does a Chief Financial Officer (CFO) Do?")
:max_bytes(150000):strip_icc():format(jpeg)/GettyImages-2159746556-2e3b77ab7fc54f1b97c114d57974e4f1.jpg "What Happens to Your Money When Your Fintech Company Goes Bust?")
:max_bytes(150000):strip_icc():format(jpeg)/GettyImages-119717054-dc96ff6f97be43ca89b9d19f53318a70-a8d2635c71d54da794bbfdc95d522e44.jpg "<div>Yes, You Can Retire on a Cruise Ship. Here's What It Costs</div>")
:max_bytes(150000):strip_icc():format(jpeg)/GettyImages-469310035-6b91d5b65b7449c5882b4144acd14206.jpg "Correlation Coefficients: Positive, Negative, and Zero")
:max_bytes(150000):strip_icc():format(jpeg)/GettyImages-497277330-0ce0bc2661664a18ac4476b5be0eaa8d.jpg "On Which Financial Statements Do Companies Report Long-Term Debt?")
:max_bytes(150000):strip_icc():format(jpeg)/GettyImages-1055247044-c1c66750541b4532813e54d8bc5a1854.jpg "<div>Credit Rating vs. Equity Research: What's the Difference?</div>")
:max_bytes(150000):strip_icc():format(jpeg)/GettyImages-518595670-91421a5730064d22b00fb052e694fdc8.jpg "<div>A Beginners' Guide to Managing Your Money</div>")