***Stocks on pace for winning week***
With more than half of the trading week now in the rearview mirror, the three major indexes are poised to finish higher. The S&P 500 is up about 2% on the week. Meanwhile, the Dow and Nasdaq Composite have added around 2.1% and 2.2%, respectively.
***Hong Kong markets cool after previous session’s gains***
Hong Kong’s Hang Seng index fell 1.81% in Thursday morning trade, shaving off more than half of its gains from the previous session. The Hang Seng Tech index also shed 2.34%. Most tech-focused stocks had rallied on Wednesday on signs of cooling U.S. inflation, which lifted hopes that the Federal Reserve could soon end its interest rate hiking policy. On Thursday, stocks, including Alibaba, Xiaomi, Xpeng, and Li Auto, were among decliners clocking losses between 2.4% and 6.79%.
***CNBC Pro: UBS expects the Fed to halve interest rates next year. Here are 3 of their preferred trades***
UBS has highlighted several stock ideas it favors for 2024, as it forecasts massive cuts for interest rates next year. The investment bank expects the U.S. will see slower economic growth and strong disinflation, leading to an interest rate cut of 275 basis points. That would bring the Federal Funds Rate down from the current range of 5.25% and 5.5% to between 2.50% and 2.75%. Given the economic outlook, UBS strategists recommend a number of trades to clients for 2024.
***Earth is ‘big enough’ for U.S. and China to succeed, Xi says as he meets Biden***
The U.S. and China have agreed to resume high-level military communication, according to both countries. U.S. President Joe Biden and Chinese President Xi Jinping met Wednesday in their first face-to-face encounter in a year. “We’re back to direct, open, clear communications,” Biden said at a press conference after the talks.
The summit, held on the sidelines of the Asia-Pacific Economic Cooperation conference in San Francisco, followed efforts between the countries to increase high-level communication amid continued tensions.
***Mega-cap banks could take hits to their net interest income levels as rates fall, Deutsche Bank says***
Big banks could be in trouble as rates fall, according to Deutsche Bank. “Mega-cap bank disclosures suggest all remain positioned for higher (not lower) interest rates,” said analyst Matt O-Connor. He used third-quarter 10Qs from major financial institutions to update interest rate sensitives. Of the biggest names, Citi and Goldman Sachs are both “relatively neutral to changes in rates, with modest hits to net II [net interest income] from lower rates and modest boosts from higher rates.” On the other hand, as rates fall, both Bank of America and Wells Fargo would take the biggest net interest income hits.
Morgan Stanley’s wealth management division would also take a large hit to net interest income, although outside of the division, the bank seems to be “liability positioned,” implying that “the net impact to net II from lower rates is less than what MS discloses,” O-Connor wrote.
***Goldman Sachs is out with its official 2024 outlook***
Goldman Sachs just came out with its official 2024 outlook, and has a message penned by Taylor Swift for investors.
***See the stocks making big moves after hours***
***Stock futures open slightly lower***
Stock futures inched lower shortly after 6 p.m. ET. Futures tied to the Dow and S&P 500 slipped 0.1% each. Nasdaq 100 futures lost 0.2%.