On Monday, The Dow Jones (DJI) traded at a record high. Bank stocks on the index rallied on expectations that the economy will grow.
Visa (V), JPMorgan Chase (JPM), Goldman Sachs (GS), and Bank of America (BAC) are the bank companies to continue holding. However, risks of a correction increase if the index prices in too optimistic an economic scenario.
On Wednesday, the Bureau of Labor Statistics will report the Consumer Price Index for October. Economists are expecting inflation to rise slightly. They also expect CPI to rise this month. The persistent inflation contradicts the Fed’s rate cut last year. Still, interest rate futures are pricing in a 65% chance of another 25 basis point cut when the central bank meets in December.
Other Risks
Markets are hardly concerned about AI solutions disappointing corporations. They expect AI will cut costs, replace workers, and become the “must have” tool. Notice that Microsoft’s (MSFT) stock is losing momentum. The stock is trading at lower highs since peaking at over $440 in September.
Markets are worried that Microsoft’s CoPilot, powered by ChatGPT, will not drive Office 365 subscription sales higher. Despite AI potentially failing to deliver on chatbot solutions, Nvidia corporations will still buy more servers and networks. That would increase demand for Nvidia (NVDA) chips.
