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Let’s start with stocks. Chip stocks dragged on the market again yesterday as big banks kicked off earnings season. The Dow lost 0.35% and the Nasdaq 0.15%, while the S&P 500 barely moved and stayed just below its record. Chipmakers fell further after reports that China’s CXMT is making advances that could challenge Micron and other big memory chipmakers.
The International Monetary Fund slightly raised its forecast for the world economy yesterday, to 3.1% growth this year from 3.0% in July. It expects the U.S. economy to grow 2.3% this year and next. The fund also warned that a sharp drop in AI-related stocks is one risk to that outlook, along with rising debt and bond yields. IMF chief Kristalina Georgieva called AI’s effect on jobs “a slow moving tsunami” and estimated it will affect about 40% of jobs worldwide.
The Nobel Prize in economics went to two American economists, Robert E. Hall and Michael Woodford, this week. Their big insight is that people spend based on what they expect to happen, not just on what’s happening now. Families that expect bigger paychecks later spend more today, and businesses that expect higher costs down the road raise prices now. Central banks around the world now use these ideas to fight inflation and recessions. Here’s an in-depth explainer.
What to watch today: At 8:30 a.m. ET, the government releases September’s consumer price index, its main measure of inflation. Bank of America and Morgan Stanley also report earnings this morning.
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