CNBC Daily Open: U.S. CEOs turn positive on the economy

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Japan’s Nikkei hit new highs on Friday, reaching the 37,000 mark for the first time in 34 years. The S&P 500 and Dow also experienced gains, while the Nasdaq Composite rose by 0.24% thanks to strong earnings. Google renamed its artificial intelligence chatbot and assistant from Bard to Gemini as it aims to develop a true AI assistant. Despite recent strong performance, Japan’s stock market is facing challenges from “zombie” firms. US President Joe Biden refuted claims that he had willfully retained classified material at his Delaware home, while former President Donald Trump won the Nevada Republican caucus. Morningstar’s chief markets strategist suggested that the Magnificent Seven stocks are losing steam, highlighting the attractiveness of lesser-known US small caps instead. A positive turn in sentiment among US chief executives was observed, with the latest Conference Board report showing that the sentiment index rose to 53 in Q1 2023, indicating optimism for the economy. CEOs cited reduced inflation and Federal Reserve interest rate cuts as top developments that could benefit businesses. However, the upcoming presidential elections were identified as the biggest business challenge in the US this year.

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It seems American CEOs are feeling more upbeat about the state of the economy.

For the first time in two years, the index that measures sentiment among U.S. chief executives has turned positive.

It rose to 53 in the first quarter, up from 46 in the final three months of 2023. A reading above 50 suggests CEOs have become optimistic about what’s ahead for the economy.

CEOs also cited reduced inflation (34%) and Federal Reserve interest rate cuts (28%) as top developments that might benefit businesses.

The positive turn in confidence is consistent with recent economic data that showed a resilient economy and a robust labor market as well as slowing inflation.

Moreover, the recent slate of stellar corporate earnings have led to a booming stock market, with the S&P 500 briefly crossing the key 5,000-point threshold for the first time.

Despite CEOs’ bullishness, caution also remains.

Asked to identify the biggest business challenge in the U.S. this year, an overwhelming 51% pointed to the upcoming presidential elections.