Shoppers shop at a grocery store in the Chinatown district of San Francisco, California, USA, on Monday, January 6, 2025.
David Paul Morris | 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
Inflation fears pull back US markets
US stocks fell and Government bond yields rose on Tuesday as the ISM services index shows a big jump in prices for December. Asia-Pacific markets trading was mixed on Wednesday. The South Korean Kospi rose 1.3%. It was buoyed by shares of Samsung Electronics, which rose about 3.6% even as a company prognosis that its profit in the fourth quarter will be lower than LSEG’s expectations.
Meta is ending its fact-checking program
Target on Tuesday announced it will eliminate its third-party fact-checking program to “bring back free expression” and move to a “Community Note” model, similar to Elon Musk’s Platform X system. Employees went to their internal forum and he criticized the company’s decisionmade two weeks before the inauguration of US President-elect Donald Trump.
Anthropic’s potential valuation of $60 billion
Anthropic, an artificial intelligence startup founded by former OpenAI research executives, is in the late stages of conversation to raise as much as $2 billion at a $60 billion valuation, CNBC confirmed. The funding round is being led by Lightspeed Venture Partners, according to a person familiar with the matter. Anthropic, which has a lot of support Amazonthe creator of the AI chatbot is Claude.
India could benefit from Trump, says portfolio manager
US President-elect Donald Trump’s plans to impose high tariffs on China do Geopolitical positioning of India “favorably in this era of Trump 2.0,” according to GIB Asset Management portfolio manager Kunal Desai. India is an attractive investment destination because of its monetary sovereignty and improved return on capital, Desai said.
[PRO] Warning signs in the stock market
Howard Marks, co-founder and co-chairman of Oaktree Capital Management who famously predicted the dot-com bubble, sees five warning signs on the stock exchange. While Marks isn’t calling it a bubble, he is concerned about signs of rising stocks. Here’s what investors should pay attention to, according to Marks.
Conclusion
In a sign of how worried investors are right now about the return of inflation, Institute for Supply Management Services Indexan inflation reading that is usually secondary to more significant data points like the consumer price index sends shock waves through the market.
The price index for the December ISM report jumped to 64.4% from 58.2% in November, an increase of more than 10%. It’s the first time since January 2024 the reading is above 60%, noted Steve Miller, chairman of ISM’s business research committee.
It could just be the beginning of an undesirable upward trend. Miller attributes part of the expansion in service activity to “risk management for the effects of port strikes and potential tariffs” — both of which create inflationary pressures.
In response, investors pushed 10-year Treasury yield to 4.699% during the US trading day, the highest level since April 26. They also cut their expectations for a 25 basis point rate cut at the US Federal Reserve meeting in January, estimating a 4.8% chance of that happening, down from an 8.6% chance just a day ago, according to CME Group’s FedWatch tools.
Stocks suffered. The S&P 500 fell 1.11 percent Dow Jones Industrial Average fell 0.42% and Nasdaq Composite slipped 1.89%, dragged down by falling tech stocks. Nvidia fell 6.2%, ending its three-day winning streak.
“You’re getting a recalibration of inflation expectations and Fed rate expectations. That’s triggered this small selloff in equity markets after earlier enthusiasm,” said Tom Hainlin, senior investment strategist at US Bank Asset Management Group.
But the strong ISM report also suggests the U.S. economy is still doing well, providing fertile ground for profit growth, Hainlin said. And as David Lefkowitz, CIO head of U.S. equities for UBS, wrote in a note on Monday, “profit growth is more important” than estimating returns over the next 12 months.
A single data point from a single measure of inflation does not indicate the trajectory of inflation or corporate health for the coming year. But for now, it pays to tread carefully.
— CNBC’s Jeff Cox, Sean Conlon, Pia Singh and Lisa Kailai Han contributed to this report.
