CNBC Daily Open: Turbulent times for Boeing

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January 8, 2024
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Boeing 737 MAX airplanes, including the 737 MAX 9 test plane (L), are seen at Renton Municipal Airport, on March 14, 2019 in Renton, Washington.

Stephen Brashear | 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.

What you need to know today

Boeing shares tumble
Boeing shares plunged 8% on Monday after the Federal Aviation Administration ordered airlines to ground dozens of Boeing 737 Max 9 aircraft for urgent inspections. The order was issued on Saturday after a door plug blew out in the middle of an Alaska Airlines flight on Friday. The bad news kept piling on, as United Airlines said that it found loose bolts on door plugs of several Boeing 737 Max 9 planes.

Markets get a tech boost
Wall Street’s main indexes kicked off the week with gains, boosted by tech shares. The S&P 500 closed 1.41% higher, while the tech-heavy Nasdaq Composite jumped 2.2%. The Nasdaq clocked its best day since Nov. 14. The Dow Jones Industrial Average added 0.58% by close. Tech shares, along with retail lifted Europe’s Stoxx 600 index which closed 0.34% higher.

New and shiny AI chips
Nvidia unveiled three new graphics cards on Monday — the RTX 4060 Super, RTX 4070 Ti Super and RTX 4080 Super — priced between $599 and $999. After riding last year’s artificial intelligence boom on its expensive server graphics processors, Nvidia now aims to boost its presence in consumer GPUs for so-called “local” AI that can run on a PC or laptop from home or an office.

Housing market kickstart
Mortgage interest rates dropped sharply in December, which are likely to have started 2024’s spring housing market early. Rates are nearly a full percentage point lower compared with October, and consumers expect them to slide further, according to a monthly consumer survey by Fannie Mae. The average rate on the 30-year has hit more than a dozen record lows in 2020 and 2021, below 3%, causing a historic run on homebuying and a sharp rise in prices, only to then more than double in 2022.

[PRO] RBC raises 2024 S&P 500 target RBC Capital Markets’ head of U.S. equity strategy, Lori Calvasina, raised her year-end S&P 500 price target to 5,150 from 5,000. This arrives despite the market’s slow start to the year. The current projection is about 9.6% higher than the S&P 500′s Friday closing level of 4,697.24.

The bottom line

It’s only the second week of the new year and it isn’t shaping up to be the best start for the aviation industry. With a Japan Airlines flight carrying hundreds of passengers catching fire on a runway to a plane panel blowing out during an Alaska Airlines flight.

The more recent incident involving Boeing’s 737 Max 9 planes has led to the FAA to ground the planes, affecting around 171 aircraft worldwide. Boeing has spent the last five years since the 2018 and 2019 fatal crashes of its smaller and more popular Boeing 737 Max 8, trying to regroup management and tackle worldwide grounding of that particular model.

Russ Mould, investment director at AJ Bell, noted the incident was the latest in a “string of problems for the company,” and suggested airlines using 737 Max planes will be “thinking long and hard about their future aircraft requirements.”

“There are naturally questions being asked about the quality checks and whether Boeing is trying to do too much too fast,” Mould said.

Meanwhile, American home buyers could be making a return this year after the latest Fannie Mae survey showed a sharp drop in mortgage rates last month. Mark Palim, deputy chief economist at Fannie Mae said that for the first time since the survey was launched in 2010 more homeowners on net now believe rates will go down rather than up.