Chris Licht, Chairman and CEO, CNN Worldwide, speaks onstage during the Warner Bros. Discovery Upfront 2023 at The Theater at Madison Square Garden on May 17, 2023 in New York City.
Kevin Mazur | Getty Images Entertainment | 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
- U.S. Treasury Secretary Janet Yellen told CNBC she wouldn’t be surprised if more banks start to consolidate, given the increased pressures on the banking system. Yellen also acknowledged that commercial real estate might be the next sector to experience troubles.
- Millionaires in the U.S. are hoarding more cash than they normally would because they think the economy will weaken this year, the CNBC Millionaire Survey found. Still, compared to the start of the year, a bigger proportion of respondents think the stock market will end the year higher.
- PRO There are signs inflation is starting to ease in the U.S., according to economic data released in the past week. Wage growth is slowing, housing prices seem to be moderating and prices paid for services in May rose at their second-slowest pace since October 2020.
The bottom line
Prospects — for both firms and markets — changed as quickly and suddenly as the haze engulfed New York.
Two notable companies unexpectedly bade farewell to their CEOs. Chris Licht relinquished his position as CNN’s CEO and left the company, Warner Bros Discovery, the parent company of CNN, said Wednesday morning. Licht’s yearlong tenure was marked by missteps, with the most significant being the town hall with Donald Trump. So it was perhaps not surprising that investors were relieved by his departure, as indicated by the 8.43% jump in Warner Bros‘ shares.
The leadership change at GameStop, however, was not as well received by investors. GameStop fired its CEO Matthew Furlong and appointed Ryan Cohen as executive chairman effectively immediately, the video game retailer said. Cohen is known as “the god figure of the meme-stock community,” a Reddit user, who preferred to be anonymous for fear of retaliation, told CNBC. But investors not convinced of Cohen’s divine status sent GameStop’s shares back to the mortal plane: The company’s shares plummeted close to 20% in extended trading.
Broader markets experienced an abrupt change in direction as well, reminding investors of the mutability inherent in markets — even as the CBOE Volatility Index dipped ever lower. (Perhaps this tells us not to put too much faith in any single data point.)
After spending so much time worrying about a narrow market rally and celebrating weekslong winning streaks, both notions were challenged yesterday. Big Tech firms like Microsoft and Google fell at least 2%, while semiconductor companies like Nvidia and Qualcomm lost around 1%. The S&P 500 slid 0.38%, the Dow Jones Industrial Average inched up 0.27% and the Nasdaq Composite fell 1.29%. That means the Nasdaq is down 1% week to date, putting it at risk of breaking its 6-week winning streak.
Conversely, the Russell 2000 Index of small-cap companies added 1.78%, and is on track for its second positive week in a row. That’s made analysts more optimistic about the economy. Smaller companies are more sensitive to economic conditions because they tend not to have the financial heft to defy a downturn. As LPL Financial’s chief global strategist Quincy Krosby writes, “Small-caps have traditionally served as a bellwether in terms of the broader economic landscape.”
But as much as bellwethers are useful, right now the landscape is still shrouded in haze.
