Markets dismiss inflation warnings
U.S. Federal Reserve Chairman Jerome Powell during a news conference following a meeting of the Federal Open Market Committee, Wednesday, Dec. 18, 2024, in Washington.
Al Drago | Bloomberg | Getty Images
This report is from today’s CNBC Daily Open, international markets bulletin. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. As you see? You can subscribe here.
Things you need to know today
The Fed is cautious about inflation and Trump’s policies
At their December meeting, the US Federal Reserve officials have expressed concern that inflation will remain stubbornly above the central bank’s 2% target and the possible impact of US President-elect Donald Trump’s policies. As a result, there will be officials is moving more slowly to cut interest ratesHe pointed to the protocols released on Wednesday.
Stocks shrugged off inflation concerns
US stocks rose small gain on wednesday although 10-year Treasury yield touched him the highest since April After the publication of the minutes of the Fed. All over Europe Stoxx 600 the index lost 0.19%, gives up previous gains after flash information The economic sentiment indicator of the EU by the European Commission showed a decrease of 1.7 points in December.
Controversy over quantum computing
Nvidia CEO Jensen Huang said Tuesday that “very useful quantum computers” are coming to market. It takes from 15 to 30 yearscausing quantum computing stocks to fall on Wednesday. Alan Baratz, CEO D-wave quantHuang, whose shares fell more than 30%dead wrong” — “We at D-Wave are commercial today,” Baratz told CNBC.
Rolls-Royce benefits from ultra-wealth
Rolls-Royce Motor Cars on Wednesday he said is investing more than £300 million ($369.9 million) to expand its global headquarters. The investment will help meet growing demand from the ultra-rich who own it custom trims required for example, 18-carat gold sculptures, embroidery with more than 869,500 stitches and holographic paints.
(PRO) Small-cap index close to correction
The Russell 2000 It lost 0.48% in Wednesday’s trade, taking it closer to correction territory, which is usually seen as a 10% decline from the recent high. A Bank of America strategist explains why the benchmark of the smallest 2,000 stocks in the Russell Index. encountered obstacles in December and may see more trouble ahead.
Bottom line
On paper, the minutes of the Fed’s December meeting spelled bad news for investors. Officials were concerned about inflation and the impact of Trump’s announced policies (although Trump was not specifically named).
“Almost all participants judged the upside risks to the inflation outlook to be increasing,” the report said. “Participants reported stronger-than-expected readings on inflation and the likely effects of potential changes in trade and immigration policy.”
As a result, Fed officials see the pace of interest rate cuts slowing down in the future.
Upside risks to inflation, problematic policies for the economy and fewer-than-expected interest rate cuts: It’s a strong and bitter brew for investors to swallow. The yield on the 10-year Treasury note hit 4,730% in intraday trading, the highest since April.
Still, stocks shrugged off that warning to rally higher on Wednesday. The S&P 500 It added 0.16% and Dow Jones Industrial Average It increased by 0.25%. The Nasdaq Composite It lost 0.06% — as did tech stocks Palantir, Advanced Micro Devices and Micro Strategy had a rough day – but it’s still close to a straight line and not a steep decline.
Investors appear to have priced in inflation warnings – the Fed’s price most recent dot plotPredicting only two quarterly cuts in 2025, it had already shaken the markets when it went on sale in December.
Fed Governor Christopher Waller also gave investors some help. He who performed in Paris he said In recent years, the persistence of inflation has primarily been driven by “predicted” prices, such as housing services, while “observed” prices of other goods and services indicate inflation.
Waller added that if economic conditions go his way, he would “support continuing to cut our policy rate in 2025.”
The U.S. jobs report for December, due out on Friday, isn’t all that precious. This could be the next catalyst for the markets.
— CNBC’s Jeff Cox, Sean Conlon and Pia Singh contributed to this report.
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