Arm Holdings CEO Rene Haas takes a photo with leadership members before the Nasdaq opening bell at Nasdaq MarketSite on September 14, 2023 in New York City.

Michael M. Santiago | Michael M. SantiagoGetty Images News | Getty Images

This report comes from today’s CNBC Daily Open, our new international markets newsletter. CNBC Daily Open keeps investors updated 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

Arm’s long range
Arm’s stock price rose nearly 25% on its first day of trading on Nasdaq in New York and rose a further 6.8% in after-hours trading. The chip designer priced its stock at $51 a share in its initial public offering. Arm stock opened at $56.10 per share and closed at $63.59 per share. That gives the company a fully diluted market cap of about $68 billion and a higher price-to-earnings ratio than Nvidia.

market rebound
U.S. stocks rose on Thursday, driven by Arm’s encouraging performance and upbeat U.S. economic data, with the Dow Jones Industrial Average rising 0.96%, its best one-day gain since August. Asia-Pacific markets rose on Friday, encouraged by better-than-expected data from China. Japan’s Topix stock index rose 1.25%, hitting a 33-year high, and SoftBank’s stock price rose about 2.7% after Arm’s outstanding performance.

China’s economy picks up
Finally, some positive economic data from China. Retail sales in August increased by 4.6% year-on-year, exceeding the 3% growth forecast. Industrial production rose 4.5%, also exceeding expectations of 3.9%. However, fixed asset investment was still dragged down by the real estate industry, with a growth rate of 3.2%, slightly lower than the expected 3.3%.

brake suddenly
Thousands of UAW members go on strike after union fails to reach agreement General Motors, Ford and star. Workers at three major U.S. assembly plants — which are targeted because they make lucrative but still high-demand cars — plan to stop work starting Friday.

(PRO) Cash or Stock?
In recent weeks, U.S. Treasury yields have risen to their highest levels in decades. Meanwhile, major stock indexes fell in August. This enhances the appeal of holding cash rather than investing in stocks. But will this trend continue for the rest of the year? Analysts from the big banks weigh in on the cash vs. stocks debate.

bottom line

When you have a toothache, your entire body feels pain. Likewise, when Arm experiences a burst of euphoria, it radiates throughout the market, giving the market its best day in weeks.

Art Hogan, chief market strategist at B. Riley Financial, said: “Arm’s successful IPO … raises the possibility that the capital markets window may be opening again after being all but closed for the past 18 months.”

Big banks are excited that the dormant IPO market for technology companies may finally be coming alive. (For banks, more IPOs mean more deals — and higher revenue.) JPMorgan Rose almost 2%, Morgan Stanley up 2.09% Goldman Sachs Soared 2.86%. Tech IPOs are particularly important for Goldman Sachs because the bank relies more on investment banking than its rivals. Goldman Sachs, which has been struggling of late, could see its fortunes change as Instacart and marketing company Klaviyo prepare to go public.

Goldman Sachs and JPMorgan Chase are important components of the Dow. That helped the blue-chip index rise 0.96%, its best one-day gain since August 7, allowing it to close above its 50-day moving average for the first time since September 1. S&P 500 Index rose 0.84%, the best performance in two weeks, Nasdaq Composite Index up 0.81%.

Meanwhile, August core PPI data came in mild, easing concerns after the core consumer price index came in higher than expected. But because the Consumer Price Index (CPI) is a lagging indicator, while the Producer Price Index (PPI) is considered a leading indicator (that is, it predicts future economic conditions), the market does not think the situation is like consumer inflation. Take comfort in being portrayed as so bad.

Retail sales rose 0.6% in August, beating expectations of 0.1%. Combined with the PPI report, this suggests that even if inflation gradually cools down, the U.S. economy may avoid a recession on the back of tireless consumers.

“Inflation is moving in the right direction, but the economy is not collapsing, which is a perfect framework,” Hogan said. “It really paints the picture that the Fed did the right thing and we may very well be plotting this elusive Soft landing.”

But as we all know, the economy is unstable. Hence Hogan’s overarching warning: “At least that’s the impression we’re getting this week.” Still, after markets closed lower last week, any reprieve, however brief, will be welcome.

Svlook

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