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
Mixed markets, rising yields
U.S. markets were mixed on Monday. The Nasdaq Composite rose while the S&P 500 and the Dow Jones Industrial Average fell, with the latter snapping its three-day winning streak. The 10-year Treasury yieldjumped almost 12 basis points. Europe’s Stoxx 600 index lost 0.66%, with almost all sectors retreating, though oil and gas stocks managed to gain 0.6%.
Goldman predicts 3% annualized return
The S&P 500 will return just 3% over the next 10 years, on an annualized and nominal basis, forecast Goldman Sachs’ equity strategy team led by David Kostin. By comparison, the index has returned an average 13% annually over the last 10 years, according to Goldman. The team pointed to high valuations and concentration in today’s stock market as reasons for their forecast.
Autonomous AI agents
Starting next month, Microsoft will allow businesses to create autonomous artificial intelligence agents, the company announced Monday. These agents can perform tasks typically done by a human being — Microsoft demonstrated an AI agent parsing an email, checking its correspondence history, finding the right person and writing a reply.
Disney CEO search
Disney is looking to name a replacement for its CEO Bob Iger in early 2026, the media conglomerate said Monday. In 2020, Iger announced he would step down as Disney’s, but returned and picked up the mantle in November 2022, replacing his chosen successor Bob Chapek.
[PRO] Ranking the Magnificent Seven
The Magnificent Seven bag of stocks — Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla — is responsible for most of the S&P 500’s rally this year. But are all seven equally magnificent? Not so, according to a tech investor who owns all seven stocks. Here’s how he ranks the stocks, based on his expectations of their future performance.
The bottom line
High interest rates were supposed to put a lid on a hot U.S. economy, thereby cooling inflation as well. It’s worked so far: Inflation has fallen from a peak of 9.1% in June 2022 to 2.4% in September 2024, going by the annual rate of the consumer price index.
But “putting a lid” on something, in culinary terms, also helps to keep the heat circulating within a space. That’s what the U.S. economy, like a stew constantly simmering, seems to be doing.
Despite the Conference Board’s Leading Economic Index falling more than expected in September, experts and markets think both the economy and interest rates will remain warm — if not hot — to the touch.
“We’ve raised rates a lot, and the US economy has basically absorbed them and still continues to perform quite well,” Minneapolis Federal Reserve President Neel Kashkari said on Monday. That indicates “the neutral rate seems to be higher” at this point of time, Kashkari added.
The neutral rate is the point at which interest rates neither stimulate nor hold back the economy. In other words, the long-term interest rate might end up higher than its historical average.
The 10-year Treasury yield reflected that concern. After climbing nearly 12 basis points, it’s now around 4.19%.
“Bond yields continue to back up, which implies to me that investors are now thinking that the Fed will be slower to lower interest rates,” said CFRA Chief Investment Strategist Sam Stovall.
Rising yields put pressure on stocks. The S&P 500 fell 0.18% and the Dow Jones Industrial Average lost 0.8% to break its three-day winning streak. The Nasdaq Composite, however, managed to gain 0.27%.
Hot stew is delicious. But, as Goldilocks has taught us, too hot and it’ll burn our tongue. Too cold and it’s unpalatable. It has to be just right.
— CNBC’s Jeff Cox, Samantha Subin, Pia Singh and Sarah Min contributed to this report.
