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U.S. consumer spending data looms

A family walks past a store advertising a Black Friday sale near Pentagon City Mall in Arlington, Virginia, on November 22, 2023. (Photo by ANDREW CABALLERO-REYNOLDS / AFP) (Photo by ANDREW CABALLERO-REYNOLDS/AFP via Getty Images)

Andrew Caballero-reynolds | Afp | 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

Asia stocks mixed
Asia markets
were mixed Thursday as investors assessed Japan’s spring wage negotiations. The Nikkei 225 and Topix gained as markets priced in the prospect of the Bank of Japan tightening policy. Overnight, Wall Street also ended mixed dragged down by tech stocks as investors await key updates on retail sales and producer prices. The S&P 500 and the Nasdaq Composite slipped 0.19% and 0.54%, respectively. The 30-stock Dow , on the other hand, added 0.1%.

EV hype may be over
The euphoria around electric vehicles is waningFord Motor, General Motors and Mercedes-Benz are some of the major automakers that are scaling back or delaying their EV plans. This comes as the sector sees lower rates of growth and a slower pace of adoption than previously expected. 

Palantir CEO on backing Israel
Palantir CEO Alex Karp said his outspoken pro-Israel views have caused staff to leave the company and that he expects to see more walk out. “If you have a position that does not cost you ever to lose an employee, it’s not a position,” Karp said in an interview on CNBC.

House passes TikTok bill
The U.S. House of Representatives passed a bill that could lead to a ban against TikTok if its Chinese owner, ByteDance, doesn’t sell its stake in the popular video app. The bill now heads to the Senate where it faces steep hurdles as senators are divided over the legislation.

[PRO] China stocks worth the risk
Chinese stocks are a “risk worth taking,” said Jason Hsu, chairman and chief investment officer of Rayliant Global Advisors. He noted they are “trading at the cheapest” while offering “a big discount,” and sees huge opportunities to play the market.

The bottom line

American consumers started the year on shaky footing but a bounce back could be in sight.

February’s retail sales data will be in focus today and should bring insight into the state of the U.S. economy.

Economists expect consumer spending to rebound strongly after January’s sharp retreat.

“Even as we anticipate a moderation in spending this year, we believe the January slowdown somewhat overstates the near-term pullback in consumption. Households are still benefiting from a real income tailwind that should remain supportive of spending in the near term,” Wells Fargo wrote in a note.

“We expect to see a rebound in February spending and forecast retail sales advanced 0.8%.”

Consumer strength has underpinned overall economic growth and has proven far more resilient than most policymakers and economists predicted.

Yet, sticky inflation could take a toll and risk growth prospects ahead.

“The case for a gradual but sustained slowdown in growth in consumers’ spending from 2023’s robust pace is persuasive,” wrote Pantheon Macroeconomics in a note.

“Most households have run down the excess savings accumulated during the pandemic, while the cost of credit has jumped and last year’s plunge in home sales has depressed demand housing-related retail items like furniture and appliances.”

Investors will also be watching out for February’s producer prices due today, any upside surprises like January’s hot print could further complicate the inflation picture for the Fed.  

The report is the last major piece of economic data to be released prior to the central bank’s policy meeting next week. 

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