CNBC Daily Open: Markets Plunge as Economy Booms and Interest Rates Rise
Quick Summary
The U.S. economy is showing signs of strength in January, with the producer price index rising 0.7%, the biggest increase since June. This increase in inflation, combined with the low unemployment rate and rebound in consumer spending, implies that inflation remains uncomfortably high and sticky. Tesla is recalling 362,758 vehicles due to its experimental driver-assistant software and Bernstein analyst Gautam Chhugani is predicting a comeback for crypto in 2023. Markets may be viewing recent U.S. regulatory actions as less severe than expected.
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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.
U.S. stocks are cowed by a persistently hot economy — and hawkish rhetoric from the Fed.
The U.S. producer price index, which measures inflation at the wholesale level, rose 0.7% in January. It was the biggest increase since June, and 0.3 percentage points higher than economists had expected.Tesla is recalling 362,758 vehicles equipped with its experimental driver-assistant software. The company warned that the software, known as Full Self-Driving Beta, may cause vehicles to crash.PRO Crypto is making a comeback in 2023, according to Bernstein analyst Gautam Chhugani. Investors may be viewing recent regulatory actions in the U.S. as less severe than they had expected.
Looking at the January figures, the U.S. economy is firing on all cylinders. A quick recap: The lowest unemployment rate in 53 years. A rebound in consumer spending despite higher prices. And overnight, we found out that the producer price index rose the most in eight months. This almost bizarrely strong economy implies that inflation — while still falling — remains uncomfortably high and sticky.
For a while, it seemed as if markets could live with that — and even embrace it as a new normal, in which economic growth can exist comfortably with inflation higher than 2%….
