A television station on the floor of the New York Stock Exchange broadcasts the speech of Jerome Powell, Chairman of the Federal Reserve, after a meeting of the Federal Open Market Committee 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 tells investors everything they need to know, no matter where they are. Do you like what you see? You can log in Here.
What you need to know today
The Fed could force global banks to act
The US Federal Reserve indicated this on Wednesday Fewer interest rate cuts are expected for 2025 than previously forecast, roiled markets and increased the strength of the dollar. Global central banks insist their monetary policy is independent of the Fed, but such currency moves could be force them to act.
Markets fall, but Dow breaks losing streak
On Thursday, the S&P 500 And Nasdaq Composite fell slightly, and the Dow Jones Industrial Average made a small profit break his losing streak. Asia Pacific markets dropped on Friday. Australia S&P/ASX 200 fell 1.24% to a three-month intraday low before recovering some losses. Chinese and Japanese markets fell on the release of separate economic data from the two countries’ agencies.
Interest rate and inflation updates
The People’s Bank of China lifted its key interest rates on one- and five-year loans on Friday unchanged at 3.1% and 3.6%respectively. Meanwhile, Japan’s “core-core” inflation rate, which excludes fresh food and energy – and is tracked by the Bank of Japan – rose to 2.4% in November. This number is the highest since April.
Partial shutdown of the US government?
A Republican bill in the House of Representatives to fund the government for three months and suspend the debt ceiling for two years failed on Thursday evening. Thirty-eight Republicans joined most Democrats in voting against it actwhich was endorsed by US President-elect Donald Trump. Without an agreement and the passage of a law, a partial shutdown of the US government is likely to begin late Friday evening.
(PRO) A “Backup the Truck” moment
The S&P 500 fell on Wednesday and continued to fall slightly on Thursday. But this is a back-up-the-truck moment, said Tom Lee, head of research at Fundstrat Global Advisors. This suggests that, on the contrary, now is a good time to buy stocks. These are the trends Lee is keeping an eye on support his hypothesis.
The end result
From an objective perspective, major US benchmarks were little changed during Thursday’s trading session.
The S&P 500 slipped 0.09% and the Nasdaq Composite fell 0.10%, but the Dow Jones Industrial Average rose 0.04%.
But when viewed against the backdrop of Wednesday’s market decline, the direction of these shifts also provides a clue, albeit a weak one, to the narrative animating markets.
To paraphrase the stock market on Thursday, after the Fed released its forecast, stocks mostly continued to slide, but the Dow finally snapped its 10-day losing streak.
It’s kind of a mixed bag. Should Investors Continue to Be Cautious Given the Downtrend? Or should they view the Dow Jones breakthrough as a ray of hope at the end of the tunnel?
As with all things in the markets, there are no clear answers. The only thing that is certain is that data points like today’s price index for private consumer spending in the US for November will influence the markets more than before.
“Whatever the reaction is, it’s probably going to be more severe in one way or another than it would have been before the Fed really raised those expectations,” said Mike Dickson, head of research and quantitative strategies at Horizon Investments , related to the Fed forecast that the PCE will be above the central bank’s 2% target.
In fact, Wall Street’s fear indicator rose 74% to 27.62 on Wednesday the second largest jump in its history. And although the VIX cooled 12.8% on Thursday, it still closed above 20 – a sign of heightened fear in the market.
It’s somewhat ironic, but volatility may be the only thing safer now.
— CNBC’s Sarah Min, Sean Conlin, Brian Evans and Pia Singh contributed to this report.