Traders work on the floor of the New York Stock Exchange on Jan. 10, 2025 in New York City.
Spencer Platt | Getty Images
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
Nasdaq still trails other major indexes
The S&P 500 and Dow Jones Industrial Average rose on Tuesday, but the Nasdaq Composite retreated, making it the second day it’s underperformed. Europe’s Stoxx 600 index ticked down 0.08%, giving up earlier gains. BP fell 2.5% after the oil giant said its fourth-quarter profit will take a hit of up $300 million because of weaker refinery margins.
Meta cuts jobs while Microsoft freezes hiring
Meta will be cutting about 5% of its lowest-performing employees, CNBC confirmed Tuesday. CEO Mark Zuckerberg informed employees about the decision in a memo posted on the company’s internal forum on Tuesday. Separately, Microsoft plans to pause hiring in part of its consulting business in the U.S., according to an internal memo.
SEC sues Musk over Twitter shares
The SEC filed a lawsuit against Elon Musk on Tuesday, alleging the billionaire committed securities fraud in 2022 by failing to disclose his ownership in Twitter and buying shares at “artificially low prices.” Prior to Musk’s acquisition of Twitter in 2022, he’d built up a position in the company of greater than 5%, which would’ve required disclosing his holding to the public within 10 calendar days of reaching that threshold.
Slower increase in producer prices
U.S. producer prices in December rose 0.2% for the month, according to a Bureau of Labor Statistics report Tuesday. That’s lower than November’s 0.4% increase as well as the Dow Jones consensus estimate of 0.4%. On an annual basis, the headline producer price index rose 3.3% for 2024, up from the 1.1% increase in 2023.
Winners and losers of U.S. dollar’s strength
The U.S. dollar index — which measures the greenback against a basket of rivals — hit its highest level in more than two years on Monday, following a hotter-than-expected jobs report out of the United States last week. Here are the biggest winners and losers in Europe from the surge in the dollar, according to analysts.
[PRO] Nasdaq sell-off a minor adjustment?
On Tuesday, the Nasdaq Composite fell for the fifth consecutive day. However, some wealth managers are saying this could be a minor adjustment for the market rather than the start of a downturn. They explain why they’re not too concerned about the sell-off.
The bottom line
The market’s tech rout hasn’t yet stopped.
The Nasdaq Composite lost 0.23%, underperforming the S&P 500 and Dow Jones Industrial Average — which gained 0.11% and 0.52% respectively — for the second day in a row. All Magnificent Seven stocks fell, with Meta, Tesla and Nvidia registering the biggest losses, in that order.
Adding to the sector’s misery, the fall in tech shares was accompanied by news of layoffs and hiring freezes.
In a bid to reduce expenses, Microsoft will pause hiring in part of its consulting unit, reduce travel expenses and cut marketing spending, according to an internal memo.
Meanwhile, Meta announced in an internal memo Tuesday it will be “exiting approximately 5% of our lowest performers.” (Just as one “exits” fact-checking or “enters” free speech, I suppose.) Zuckerberg also warned employees that 2025 will “be an intense year.”
Zuckerberg’s warning was directed at Meta, of course, but it might also apply to tech companies grappling with heavy investment in artificial intelligence, without necessarily having the revenue to justify such high capital expenditure.
As we enter fourth-quarter earnings season, however, there are signs of optimism in the business environment for this year.
“We do think earnings will be stronger,” Jay Hatfield, founder of Infrastructure Capital Advisors, said.
“The economy is strong in the fourth quarter. Usually, companies learn if they have a problem by then, and they’re probably going to be pretty optimistic about the future because the Trump administration is pro-business. So we think that most CEOs are pretty optimistic about the forecast for 2025.”
Perhaps the upbeat CEOs are steering other sectors, as the movements of investors, who moved out of tech to utilities, financials and materials on Tuesday, suggest.
Whether this sectoral rotation persists will hinge on the consumer price index, dropping later today.
— CNBC’s Lisa Kailai Han, Hakyung Kim and Brian Evans contributed to this report.