On Thursday, November 14, 2024, Federal Reserve Chairman Powell delivered a speech on the economic outlook at Fair Park Concert Hall in Dallas, Texas, USA.
Shelby Tauber | Bloomberg | Getty Images
This report comes from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open keeps investors updated on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
What you need to know today
Post-election rallies subside
U.S. stocks fall on Thursday, get ready The week ended lower. In particular, the so-called “Trump deal” is failing. The Stoxx 600 Index in Europe rose 1.08%, ending two consecutive days of decline. British luxury goods company Burberry’s stock price soared 18.7% after announcing its brand reform plan.
Don’t rush to cut
Federal Reserve Chairman Jerome Powell said on Thursday that the Fed does not need to “rush to lower interest rates.” Powell noted that the economy remains strong and that October’s disappointing jobs report was largely due to hurricanes and worker strikes. Powell’s slightly hawkish tone dampened market enthusiasm and reduced traders’ expectations for a rate cut in December.
Wholesale prices rise slightly
The U.S. Bureau of Labor Statistics reported that the U.S. producer price index rose 0.2% in October. While this was higher than September’s 0.1% gain, the number was in line with the Dow Jones consensus forecast. Wholesale inflation this year is 2.4%. Core PPI, excluding food and energy prices, was 0.3%, in line with expectations.
Disney+ subscribers
disney Shares surged 6.2% after reporting fiscal fourth-quarter results that beat Wall Street expectations. The media giant’s net profit increased 74.2% year-over-year. That’s thanks in part to its streaming business, Disney+, which finally turned a profit and added subscribers in the recently ended quarter.
(PRO) Make big bets and hedges on China
Michael Burry, the investor who sparked the 2007 subprime crisis, is betting on China. Scion Asset Management, the hedge fund managed by Burry, has significantly increased its holdings in three Chinese Internet companies. Bury, meanwhile, appears to be hedging those bets.
bottom line
After enjoying a post-election rally, investors are once again turning their attention to issues such as inflation and interest rates.
Although consumer and wholesale price increases in October were in line with expectations, they rebounded from the previous month, indicating that there are still some hot spots in the economy.
Still, the deflationary process, in which prices slow down, is not linear. A month’s worth of price increases doesn’t necessarily mean inflation is back.
As Fed Chairman Jerome Powell noted, the effort to get inflation to the central bank’s “long-run goal of 2 percent” is likely to be “a bumpy road at times.” Just as deflation does not move in a straight line, the trajectory of interest rates does not move in a straight line. Powell added that the Fed does not need to “rush to lower interest rates” because “we are currently seeing a strong economy.”
The hawkish nature of Powell’s comments significantly reduced traders’ bets on a rate cut in December. The probability that the Fed will cut interest rates by 25 basis points at its December meeting is now 58.6%, compared with 82.5% earlier in the day. CME FedWatch Tool.
BlackRock’s Rick Rieder believes the Fed will still cut interest rates by 25 basis points in December. As for next year’s cuts, however, “the pace of the cuts and whether they really need to be cut is really in question,” Reid told CNBC.
Those concerns overshadowed post-election euphoria, sending stocks lower. this S&P 500 Index down 0.6%, Dow Jones Industrial Average down 0.47%, Nasdaq Index down 0.64%. All indexes are expected to move lower this week.
The market generally expects the U.S. economy to achieve a soft landing. For investors who rode the post-election rally and now have hit rock bottom, their landing does feel bumpy.
—CNBC’s Jeff Cox, Brian Evans and Sarah Min contributed to this report.
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