State of the Union, recession, crypto woes and more tech layoffs: What investors are watching

By Nicole Goodkind, CNN

Here’s what investors are paying attention to this Tuesday morning:

▸ President Joe Biden is set to deliver his annual State of the Union Address at 9 p.m. ET in front of a newly fragmented Congress and to Americans confused by positive economic signs, a dismal earnings season and ongoing recession predictions.

Wall Street will also be watching closely for clues about the ongoing debt ceiling debate, tax policy, foreign relations and more. The S&P 500 is currently up more than 7% for 2023 and the Nasdaq Composite has risen for five weeks straight — its best streak since November 2021. Both the Dow and S&P 500 jumped after Biden’s previous State of the Union speeches, but a bearish message from Biden could send markets on a downward path.

Markets and the SOTU: Stocks also saw gains three out of four times after former President Donald Trump addressed Congress, but overall it’s a fairly mixed bag. The S&P 500 fell by a median of 0.5% the day after President Barack Obama’s SOTU addresses, and gained a median 0.7% after former President George W. Bush’s speeches, according to Bespoke Investment Group.

▸ Treasury Secretary Janet Yellen said the probability of a recession this year is low as she touted job growth and low unemployment during an appearance on ABC’s “Good Morning America.”

“You don’t have a recession when you have 500,000 jobs and the lowest unemployment rate in 50 years,” Yellen said. Friday’s jobs report showed that the US economy added a whopping 517,000 jobs in January, according to the Bureau of Labor Statistics. The unemployment rate ticked down a tenth of a percentage point to 3.4% — the lowest jobless rate since May 1969.

▸ Binance, the world’s largest crypto exchange, said it would temporarily halt transfers of US dollars starting Wednesday. 

“Only a small proportion of our users will be impacted by this and we are working hard to restart the service as soon as possible,” the company tweeted Monday. “All other methods of buying and selling crypto remain unaffected.”

The suspension comes at an awkward time for crypto companies, and especially for centralized exchanges like Binance, which in November briefly considered a bailout of its rival FTX. That platform, which was in the midst of a liquitdity crisis, ultimately filed for bankruptcy and is now at the center of a massive federal fraud investigation.

▸ Dell plans to lay off roughly 5% of its workforce, the company said in a regulatory filing Monday, in the latest example of tech companies cutting costs in an uncertain economic climate.

Dell has about 133,000 employees, the company told CNN. At that level, the 5% cut would represent more than 6,500 employees.

The computing giant cited the “challenging global economic environment” for the cuts.

The move comes as layoffs continue to spread throughout the tech industry. Amazon, Microsoft, Google and others have each announced plans to cut thousands of workers as the companies adapt to shifting pandemic demand and fears of a looming recession.

Dell has also been grappling with reduced demand for personal computers.

European diesel prices fall as Russian ban kicks in

Europe’s ban on Russian diesel arrived this week without inflicting more pain on the region’s economy.

Although the European Union cut off its biggest supplier, diesel futures prices in the bloc fell 1.6% on Monday, amounting to a 20% loss over the past two weeks as demand in the region has waned, and efforts by countries to stockpile ahead of the ban have paid off, writes my colleague Anna Cooban.

The price drop will be met with relief by millions of the continent’s truckers, drivers and businesses that rely on diesel. About 96% of trucks, 91% of vans and 42% of passenger cars in the European Union run on the fuel, according to the European Automobile Manufacturers’ Association.

“The expectation was that, when the ban came in, diesel supply into Europe would tighten but, actually, that’s currently not materializing,” Mark Williams, a research director at consultancy Wood Mackenzie, told CNN.

The diesel ban comes two months after the bloc placed an embargo on seaborne crude oil imports from Russia, as part of a package of sanctions against Moscow for its invasion of Ukraine.

Russia accounted for 29% of the region’s total diesel imports last year, data from Rystad Energy shows. Countries have prepared for the latest ban by ramping up imports of Moscow’s diesel in recent months. Europe’s imports were up nearly 19% in the fourth quarter of 2022 compared with the same period the previous year, according to energy data provider Vortexa.

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