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Traders work on the floor of the New York Stock Exchange (NYSE) on June 14, 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.
What you need to know today
Stacking Dice for itself
Eli Lilly, the world’s largest pharmaceutical company by market capitalization, is buying Dice Therapeutics, a San Francisco-based biopharmaceutical company that develops drugs for autoimmune diseases. The $2.4 billion deal will see Eli Lilly pay $48 per share to buy Dice, a 40% premium above Friday’s closing price.
The UK ‘doom loop’
The U.K. economy is trapped in a growth “doom loop,” according to the country’s Institute for Public Policy Research. Decades of underinvestment in infrastructure, research and training has caused the economy to stagnate, which, in turn, discourages investment. The International Monetary Fund expects the U.K. economy to grow 0.4% this year.
Thali for dinner
India’s Prime Minister Narendra Modi will be hosted by U.S. President Joe Biden at a White House state dinner Thursday. Joining Biden are business leaders like Apple’s Tim Cook, Alphabet’s Sundar Pichai, Microsoft’s Satya Nadella and FedEx’s Raj Subramaniam. Their presence signals corporate America’s turn to India at a time when U.S.-China business ties are fraying.
[PRO] Squeezing out squeezed profits
Corporate profitability has probably hit the bottom. But companies aren’t likely to increase their profits in the next 12 months because of slowing price hikes and higher interest rates, according to a Goldman Sachs analysis. Still, Goldman found a basket of stocks that might defy the odds and expand their margins.
The bottom line
The long weekend, it seems, gave investors space to gather their wits on the state of the stock market, resulting in a slight pullback when trading reopened Tuesday.
The S&P 500 declined 0.47%, the Dow Jones Industrial Average lost 0.72% and the Nasdaq Composite slipped 0.16%. That’s the second day in a row that all three major indexes have closed lower.
But there hasn’t been any concrete events that might cause traders to lose hope in the rally. Here, I use the word “hope” deliberately — since market activity is as dependent on mindset, which can be arbitrary, as it is logic.
Indeed, Mike Wilson, chief U.S. equity strategist at Morgan Stanley, thinks the slowdown in stocks is simply because the fear of missing out is losing steam. ″[We] believe equity markets are as stretched as they can get with market participants wary of missing a potential new bull market,” writes Wilson.
That is to say, the reality of higher rates for longer, and a slowing economy, will soon show up in lower earnings and dampen stocks’ ebullience.
Still, the S&P has defied expectations to rise 14.5% so far this year. If history is any indication, CNBC’s Jeff Cox writes, the index might jump a further 8% in the second half of the year, according to data cited by CFRA.
But I should note here that 2023 has been rather anomalous for markets, historically speaking. Perhaps hope might turn out to be a better guide than logic this year.
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