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Jerome Powell, chairman of the US Federal Reserve, during a press conference after a meeting of the Federal Open Market Committee in Washington, DC, US, on Wednesday, December 18, 2024.
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This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed 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 and Trump policies
At its December meeting, the United States Federal Reserve officials have expressed concern that inflation will remain stubbornly above the central bank’s 2% target, and over the possible impact of US President-elect Donald Trump’s policies. Consequently, the officials will be it moves more slowly on interest rate cutsminutes released on Wednesday showed.
Stocks have weathered inflationary concerns
US stocks have soared a small gain on Wednesday even if the 10-year Treasury yield touch his highest since April after the release of the minutes of the Fed. The pan-European Stoxx 600 loss index 0.19%, relinquish previous earnings later flash data from the European Commission showed that the EU economic sentiment indicator had dropped 1.7 points in December.
Quibble about quantum computing
Nvidia CEO Jensen Huang said on Tuesday that getting “very useful quantum computers” to market could take from 15 to 30 yearscausing quantum computing stocks to catch up on Wednesday. Alan Baratz, CEO of D-Wave Quantumthat the stock slumped more than 30%, said that Huang is “dead wrong” – “We at D-Wave are commercial today,” Baratz told CNBC.
Rolls-Royce that benefits the ultra-rich
Rolls-Royce Motor Cars on wednesday he said is investing more than £300 million ($369.9 million) to expand its global headquarters. The investment will help meet the growing demand of the ultra-rich, who have custom embellishments required such as 18-carat gold carvings, embroidery comprising more than 869,500 stitches and holographic paint finishes.
[PRO] Small-cap index close to correction
U Russell 2000 lost 0.48% in Wednesday’s trade, putting it near the correction territory, which is typically seen as a 10% drop from a recent high. A Bank of America Strategist explains why the benchmark, which includes the smallest 2,000 stocks in the Russell Index, encounter obstacles in December and I could see more trouble ahead.
The background
On paper, the minutes for the Fed’s December meeting spelled bad news for investors. Officials were concerned about inflation and the impact of Trump’s stated policies (although Trump is not explicitly named).
“Almost all participants judged that risks to inflation have increased,” the minutes say. “Participants cited recent stronger-than-expected readings on inflation and the likely effects of potential changes in trade and immigration policy.”
As a result, Fed officials see the pace of future interest rate cuts slowing.
Inflation risks, problematic policies for the economy and less tax cuts than expected: It is a strong and bitter beer for investors to swallow. The yield on the 10-year Treasury note climbed 4,730% during intraday trading, the highest since April.
Still, stocks mostly shrugged off that warning to pop up on Wednesday. U S&P 500 added 0.16% and the Dow Jones Industrial Average rose 0.25%. U Nasdaq Composite slipped 0.06% – tech stocks like Palantir, Advanced Micro Devices and Micro strategy had a rough day – but it’s still close to the flat line and not a precipitous drop.
Investors, it seems, had already priced in inflation warnings – the Fed the last dot plotwhich projected just two quarter-point cuts in 2025, had already shaken markets when it was released in December.
Fed Governor Christopher Waller also provided some relief to investors. Speaking in Paris, he he said The stubbornness of inflation recently had been driven mainly by “imputed” prices such as housing services, while “observed” prices for other goods and services show disinflation.
Waller added that if economic conditions go according to his opinion, he “supports continuing our policy rate in 2025”.
What is not cheap is the US employment report for December, due on Friday. That could be the next catalyst for the markets.
— CNBC’s Jeff Cox, Sean Conlon and Pia Singh contributed to this report.
