U.S. CEOs now more optimistic about economy

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.

Asia stocks advance
Asia markets rose Friday with Japan’s Nikkei 225 as well as the Topix closing higher even as January household spending dropped more than expected.Hong Kong’s Hang Seng index and mainland China’s CSI 300 also rose. Overnight, U.S. stocks ended on a strong note with the S&P 500 jumping 1% to close at a new record. The Nasdaq Composite rose 1.51%, also hitting an all-time high, while the Dow ended up 0.3%. Investors await Friday’s jobs report for insights into the labor market, which has shown strength despite higher interest rates.

The latest Business Roundtable’s report on CEO outlook jumped 11 points to 85 for the first quarter — above its historic average for the first time since 2022.

“This quarter’s survey results underscore the resiliency of the U.S. economy and suggest accelerating economic activity over the next six months,” said Business Roundtable Chair Chuck Robbins, who is also Cisco’s chief executive.

The report showed business leaders raised their economic growth estimates for this year — to 2.1% from 1.9% last quarter. And the growing confidence was reflected in CEOs’ business plans for the months ahead.

Expectations for sales rose 13 points, while the group’s index of capital spending also increased by 16 points. Plans for hiring ticked up a modest 5 points. 

The findings dovetail the latest economic outlook in the U.S. Beige Book, a Federal Reserve survey. It also highlighted the economy picked up pace slightly in early 2024.

“The outlook for future economic growth remained generally positive, with contacts noting expectations for stronger demand and less restrictive financial conditions over the next 6 to 12 months,” it said.

Inflation pressures haven’t really gone away, the survey added, underlining businesses found it harder to pass their own higher costs onto customers, “who became increasingly sensitive to price changes.”

Still, Fed Chair Jerome Powell on Thursday noted inflation is “not far” from where it needs to be for the central bank to start lowering interest rates.

This just adds to the overall confidence that rate cuts are coming, even if the timing remains uncertain.