As investors turned their attention to data suggesting more slowing in the labour market and oil prices hitting levels not seen since June, US equities fell on Wednesday amid further indications of the economy’s ills.
While the Dow Jones Industrial Average (^DJI) declined more than 0.2%, or over 70 points, the S&P 500 (\GSPC) plummeted approximately 0.4%. There was a 0.6% decline in the Nasdaq Composite (^IXIC).
Wednesday saw more indications of a slowdown in the labour market, as the ADP measure of private payroll growth fell short of forecasts and showed an increase of 103,000 jobs in November.
This happened after the Fed’s dismal data on job vacancies on Tuesday increased expectations of a rate decrease. At least 100 basis points of cutbacks are factored in by the markets for next year.
On Wednesday, oil prices fell to a five-month low as fresh data revealed more indications of a poor demand. At $69.38 per barrel, West Texas Intermediate (CL=F) had a 4% decline. The worldwide benchmark price of crude oil, Brent (BZ=F), closed at $74.30 per barrel after declining by more than 3.6%.
See more about the implications of the Fed’s rate-hike delay on credit cards, loans, bank accounts, and CDs.
In the meanwhile, as additional individual investors jumped in, supporting expectations of rate reduction and upcoming spot bitcoin ETFs, bitcoin (BTC-USD) momentarily surpassed $44,000. After recording its longest winning run since May on Tuesday, the top digital asset has subsequently given back those gains.
In keeping with the persistent noise that an economic recession is on the way, Chadha labelled his 2024 prognosis “solid fundamentals, poor perceptions,” a reference to the fact that businesses have been doing rather well over the last year. According to Chadha, the market is already priced for the recession that some have called one of the most anticipated in history, thus any sell-off would be “short lived.”
Chadha’s argument is based on his conviction that the existing perspective on profits is distorted. Chadha observes that, based on year-over-year comparisons, earnings during the most recent quarter had just emerged from many quarters of negative growth. However, Chadha prefers to compare earnings growth quarter over quarter, and throughout 2023, earnings have been growing faster.
According to Chadha, incomes have increased by almost 11.5%.
It’s not really getting any better,” Chadha said. “Actually, this prognosis is very typical. Simply put, the belief is so pessimistic that it comes out as optimistic.”
According to Chadha, the economy may surprise to the positive in 2024, which is when the bullishness might materialise. His S&P 500 EPS projection would rise to almost $270 if the economy expanded at a pace closer to 2% annually in 2024, putting the S&P 500 at 5500.
The Deutsche Bank graphic below illustrates how their estimate for earnings and, consequently, the S&P 500 for the upcoming year would be affected by the economic outlook.
On Wednesday, Google (GOOG, GOOGL) unveiled their brand-new Gemini generative AI model. As Google’s response to Microsoft-backed OpenAI’s GPT-4, the platform is the “most capable and general model” the business has developed to yet, according to DeepMind CEO Demis Hassabis.
As a natively multimodal model, Gemini is capable of analysing text, voice, video, pictures, and code. Although there are other multimodal services, Google claims that Gemini is unique as the concept was created with consideration for all of those channels.
According to the business, other platforms train several models for different tasks, such as text, video, and photo processing, and then combine them into a single model.
Hassabis claims that this distinction enables Gemini to comprehend multimodal data more effectively and generate superior outcomes for handwritten information, photos, and videos, among other things.
Google included a number of films showcasing Gemini’s features in the announcement. A presenter demonstrated a Gemini programme in one video, displaying a painting of a blue duck and a rubber blue duck, both of which the AI could recognise.
The presenter demonstrated another example of AI by displaying two hand-drawn images of roller coasters: one without a loop and the other with one. The AI correctly identified the option with the loop when the presenter questioned which one is probably more enjoyable, unless you detest travelling around.