Federal Reserve Chairman Jerome Powell speaks at a press conference after the Federal Open Market Committee meeting in Washington, DC, on Wednesday, December 18, 2024.
Al Drago | 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 cautious on inflation, Trump policies
At the December meeting, the U.S. Fed officials have expressed concern that inflation will remain stubbornly above the central bank’s 2% target and the possible impact of U.S. President-elect Donald Trump’s policies. Therefore, officials will Minutes of the meeting released on Wednesday showed a more gradual rate cut.
Stocks shrug off inflation worries
Although U.S. stocks rose slightly on Wednesday 10-Year Treasury Bond Yield After the release of the minutes of the Federal Reserve meeting, it hit the highest level since April. Pan-European Stoke 600 The index fell 0.19%, giving up earlier gains. flash memory data European Commission data showed that the EU economic sentiment index fell by 1.7 points in December.
The debate over quantum computing
NVIDIA Quantum computing stocks tumbled on Wednesday after Chief Executive Jensen Huang said on Tuesday it could take 15 to 30 years to bring “very useful quantum computers” to market. Alan Balazs, Chief Executive Officer D wave quantumThe company, whose shares fell more than 30%, said Huang was “absolutely wrong” – “We at D-Wave are commercialized today,” Balazs told CNBC.
Rolls-Royce benefits from the super rich
Rolls Royce Wednesday explain The company is investing more than £300 million ($369.9 million) to expand its global headquarters. The investment will help it meet growing demand from the super-rich, who demand bespoke embellishments such as 18-karat gold sculptures, more than 869,500 stitches of embroidery and holographic paint finishes.
(PRO) Small-cap index nears correction
this Russell 2000 It fell 0.48% in Wednesday trading, approaching correction territory, which is typically seen as a 10% drop from recent highs. one Bank of America Strategists explain why the benchmark, made up of the smallest 2,000 stocks in the Russell index, hit a snag in December and could have more trouble ahead.
bottom line
On paper, the minutes from the Fed’s December meeting are bad news for investors. Officials worry about inflation and the impact of Trump’s stated policies (although Trump doesn’t explicitly name them).
“Nearly all participants agreed that upside risks to the inflation outlook have increased,” the minutes said. “Participants cited recent stronger-than-expected inflation data and the possible impact of potential changes in trade and immigration policy.”
As a result, Fed officials expect the pace of interest rate cuts to slow down in the future.
Upward inflation risks, problems with economic policy, and lower-than-expected interest rate cuts: this is a potent and bitter drink for investors. In intraday trading, the 10-year Treasury yield hit 4.730%, the highest level since April.
However, stocks mostly ignored the warning on Wednesday and continued to rise. this S&P 500 Index 0.16% was added, and Dow Jones Industrial Average up 0.25%. this Nasdaq Index Down 0.06% – Technology stocks such as Palantir, AMD and micro strategy Had a rough day – but still closer to flatline rather than a steep decline.
Investors appear to have priced in the inflation warning – the Fed’s latest dot plot, forecasting just two and a quarter percentage points of interest rate cuts in 2025, shocked markets when it was released in December.
Federal Reserve Governor Christopher Waller also offered some comfort to investors. Speaking in Paris, he said the recent stubbornness in inflation was driven mainly by “estimated” prices for things like housing services, while “observed” prices for other goods and services pointed to deflation.
Waller added that if economic conditions develop in his view, he would “support continued lowering of policy rates in 2025.”
Friday’s U.S. jobs report for December was not reflected in prices. This could be the next catalyst for the market.
—CNBC’s Jeff Cox, Sean Conlon and Pia Singh contributed to this report.
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