Jerome Powell, chairman of the U.S. Federal Reserve, during a press conference after the Federal Open Market Committee meeting in Washington, DC, U.S., on Wednesday, December 18, 2024.
Al Drago | Bloomberg | Getty Images
This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open informs investors about 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 and Trump policies
At their meeting in December, 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. Consequently, officials would it is moving more slowly to reduce interest ratesthe minutes released on Wednesday showed.
Stocks shrugged off inflation concerns
American stocks fell in price small gain on Wednesday although it is 10-year Treasury yield touched by his own the most since April after the publication of the FED minutes. Pan-European Stoxx 600 the index lost 0.19 percent giving up earlier gains after flash data The European Commission showed that the indicator of economic sentiment in the EU fell by 1.7 points in December.
Argument over quantum computing
Nvidia CEO Jensen Huang said on Tuesday that the market entry of “very useful quantum computers” could it takes 15 to 30 yearswhich caused quantum computing stocks to fall on Wednesday. Alan Baratz, company director D-Wave Quantumwhose shares fell more than 30%, said Huang “dead wrong” — “we at D-Wave are commercial today,” Baratz told CNBC.
Rolls-Royce benefits from the ultra-rich
Rolls-Royce motor cars on Wednesday he said is investing more than £300m ($369.9m) in expanding its global headquarters. The investment will help him meet the growing demand of the ultra-rich, who have requested decorations to order such as 18-carat gold sculptures, embroidery consisting of more than 869,500 stitches and holographic paint.
[PRO] Small cap index close to correction
The Russell 2000 it lost 0.48% in Wednesday’s trading, putting it near correction territory, which is usually considered a 10% drop from its recent high. AND Bank of America strategist explains why the benchmark, which consists of the smallest 2,000 stocks in the Russell index, he ran into obstacles in December and we could see further problems.
Conclusion
On paper, the minutes from the Fed’s December meeting bring bad news for investors. Officials were concerned about inflation and the impact of Trump’s stated policies (although Trump was not specifically named).
“Almost all participants assessed that the risks to the inflation outlook have increased,” the minutes said. “Participants cited recent stronger-than-expected inflation readings and the likely effects of potential changes in trade and immigration policy.”
As a result, Fed officials see a slowdown in the pace of interest rate cuts going forward.
Rising risks to inflation, troubled policies for the economy and fewer rate cuts than expected: It’s a potent and bitter brew for investors to swallow. The yield on the 10-year Treasury note reached 4.730% during intraday trading, the highest since April.
Still, stocks largely shrugged off that warning to tick off Wednesday. The S&P 500 added 0.16% and Dow Jones Industrial Average increased by 0.25 percent. The Nasdaq Composite slipped 0.06% — technology stocks like Palantir, Advanced micro devices and Micro strategy had a rough day — but it’s still close to a flat line, not a sharp drop.
Investors seem to have already bought into the inflation warnings — the Fed’s latest dot plotwhich predicted just two cuts of a quarter of a point in 2025, had already rattled markets when it was released in December.
Fed Governor Christopher Waller also provided some remedy for investors. Speaking in Paris, he he said the stubbornness of inflation recently has been driven primarily by “imputed” prices such as housing services, while “observed” prices of other goods and services show disinflation.
Waller added that if economic conditions go his way, he will “support continuing to cut our benchmark rate in 2025.”
What is not as highly regarded is the US employment report for December due out on Friday. That could be the next catalyst for the markets.
— CNBC’s Jeff Cox, Sean Conlon and Pia Singh contributed to this report.
