A television station on the New York Stock Exchange broadcast Federal Reserve Chairman Powell’s speech after the Federal Open Market Committee meeting on December 18, 2024.
Michael Nagel | 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
Fed could force global banks to take action
The Federal Reserve said on Wednesday Expectations for a smaller rate cut in 2025 than previously expected sent markets into disarray and boosted the dollar’s strength. Global central banks insist their monetary policy is independent of the Federal Reserve, but such currency moves could force them to take action.
Markets fall, but Dow ends losing streak
Thursday, S&P 500 Index and Nasdaq Index decreased slightly, and Dow Jones Industrial Average It managed a slight gain and broke its losing streak. Asia-Pacific stocks fell on Friday. Australian S&P/ASX 200 Index It fell 1.24% to a three-month intraday low before recovering some of its losses. Chinese and Japanese markets fell as institutions from both countries released separate economic data.
Interest rates and inflation update
The People’s Bank of China on Friday kept the one-year and five-year loan preferential rates unchanged at 3.1% and 3.6% respectively. Meanwhile, Japan’s “core-core” inflation rate, which excludes fresh food and energy, as tracked by the Bank of Japan, rose to 2.4% in November. This number is the highest since April.
Partial U.S. government shutdown?
A House Republican bill to fund the government for three months and suspend the debt ceiling for two years failed to pass Thursday night. Thirty-eight Republicans joined most Democrats in voting against the deal, which was backed by U.S. President-elect Donald Trump. Without a deal and legislation, a partial U.S. government shutdown will begin late Friday night.
(PRO) “Reverse” moment
The S&P 500 plummeted on Wednesday and continued to edge lower on Thursday. But Tom Lee, head of research at Fundstrat Global Advisors, said this was a “reversal” moment. Rather, it suggests that now is a good time to buy stocks. The trends Lee observed support his hypothesis.
bottom line
If we look at it objectively, there wasn’t much change in the major U.S. benchmarks during Thursday’s trading session.
The S&P 500 fell 0.09% and the Nasdaq fell 0.10%, but the Dow Jones Industrial Average rose 0.04%.
But seen against the backdrop of Wednesday’s market rout, the direction of these shifts also points to a narrative that’s driving market activity, albeit a weak one.
To rephrase Thursday’s stock market in these words: Stocks mostly continued to slide after the Fed released its forecasts, but the Dow Jones finally broke a ten-game losing streak.
It’s a mixed bag. Should investors continue to exercise caution due to the downward trend? Or should they view the Dow’s breakout as a light at the end of the tunnel?
As with everything in the market, there aren’t any clear answers. The only certainty is that data points, such as today’s US November Personal Consumption Expenditures Price Index, will move the market more forcefully than before.
“Whatever the reaction is, it’s likely to be more severe than it was before the Fed actually raised these expectations,” said Mike Dickson, head of research and quantitative strategy at Horizon Investments, referring to the coronavirus outbreak. The Federal Reserve predicts that PCE will be above the central bank’s 2% target.
In fact, Wall Street’s fear index surged 74% to 27.62 on Wednesday, the second-largest gain in its history. Although the Volatility Index (VIX) fell 12.8% on Thursday, it still closed above 20 – a sign of increasing panic in the market.
It’s a bit ironic, but volatility may be the only thing more certain right now.
—CNBC’s Sarah Min, Sean Conlin, Brian Evans and Pia Singh contributed to this report.
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