CNBC Daily Open: Asian shares slide, U.S. stocks flat ahead of Big Tech earnings; McDonald’s earnings miss

This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

U.S. stocks flat
The S&P 500 and the Nasdaq Composite inched higher on Monday ahead of a busy week for Big Tech earnings with investors also awaiting the U.S. central bank’s policy announcement on Wednesday. The S&P 500 closed 0.08% higher while the Nasdaq Composite gained 0.07%. The Dow Jones Industrial Average lost 0.12%. Treasury yields slipped and U.S. oil prices fell amid increasing tensions between Israel and the Iran-backed militia Hezbollah in Lebanon.

McDonald’s miss
McDonald’s quarterly earnings and revenue fell short of analysts’ expectations as same-store sales declined globally for the first time since 2020. The fast-food giant’s second-quarter net income fell to $2.02 billion from $2.31 billion a year ago, while revenue was nearly flat at $6.49 billion. The company said it was working to create value for customers who think its prices are too high, and that its recently launched $5 value meal promotion in the U.S. was bringing lower-income diners back to its stores. McDonald’s shares closed 3.74% higher.

Apple AI
Apple has released the first version of Apple Intelligence to registered developers, but the eagerly awaited AI software may not be loaded onto the next batch of iPhones. The new software is found in the developer beta of iOS 18.1, whereas iPhones launched this fall are slated to run on iOS 18. The launch of Apple Intelligence is expected to spark a wave of mobile phone upgrades since the system will only work on high-end iPhone models such as the iPhone 15 Pro and iPhone 15 Pro Max.

Asia stocks weaken
Asian stocks traded lower as the Bank of Japan began a two-day meeting where it is widely expected to raise benchmark interest rates. The Nikkei 225 slid 0.3%. The Hang Seng dropped 1.2%, while China’s CSI 300 fell 0.8%. In Australia, Fortescue fell as much as 9.2% after the Australian Financial Review said JPMorgan was helping an institutional investor sell a huge A$1.9 billion block of the miner’s shares at a discount.

Japan central bank meets 
The Bank of Japan began its two-day policy meeting Tuesday amid expectations of an interest rate hike. A Reuters poll showed economists expect the BOJ to raise its benchmark interest rate to 0.1% from the current range of 0% to 0.1%, with some experts forecasting an even bigger increase. Headline inflation, at 2.8%, and core inflation, at 2.6%, have exceeded the BOJ’s 2% target for over two years, allowing it room to raise rates.

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According to financial information provider FactSet, companies with disappointing quarterly results are getting punished more than usual this earnings season.

Companies that missed second-quarter earnings estimates suffered an average decline of 3.8% in their stock price during the five-day period that started two days before the results were released. This compares with the five-year average price drop of 2.3% during this same window for firms that disappointed Wall Street.

Those that beat the Street saw only a 0.3% rise in shares during the same period, compared with the five-year average gain of 1%.

This phenomenon underscores the high expectations going into this season as well as concerns about an overheated stock market following the strong rally so far this year.

Signs of waning consumer demand can also be seen in the automotive industry, where analysts are warning of tougher times for Detroit’s Big Three. Shares of Ford, GM and Stellantis have come under pressure following the release of their second-quarter results. 

Analysts said the U.S. market — a profit engine for most automakers — is normalizing after years of record high prices, low vehicle inventories and resilient demand. Inventories, especially for the Detroit automakers, are rising, while vehicle prices are slowly declining.

— CNBC’s Yun Li and Michael Wayland contributed to this report.