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Jerome Powell, chairman of the U.S. Federal Reserve, speaks during a news conference following a meeting of the Federal Open Market Committee in Washington, D.C., U.S., on Wednesday, Dec. 18, 2024.
Al Drago | Bloomberg | Getty Images
This is a report from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open provides investors with information 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
The Fed is cautious about inflation and Trump’s policies
At the December meeting of the US Federal Reserve officials expressed concern that inflation will remain stubbornly above the central bank’s 2% target, as well as the potential impact of US President-elect Donald Trump’s policies. Accordingly, the officials would be move more slowly to lower interest ratesreports released on Wednesday showed.
Stocks shrugged off inflation concerns
US stocks fell a slight increase on Wednesday even if The 10-year Treasury yield touched him the highest since April after the release of the Fed minutes. General Europe Stoxx 600 the index lost 0.19%, renouncing former gains after flash data The European Commission showed that the indicator of economic sentiment in the EU decreased by 1.7 points in December.
The Quantum Computing Controversy
Nvidia CEO Jensen Huang said on Tuesday that the market entry of “very useful quantum computers” could take 15 to 30 yearswhich sent quantum computing stocks tumbling on Wednesday. Alan Baratz, CEO of the company D-Wave Quantumwhose shares fell more than 30%, said Huang is “dead wrong” — “we at D-Wave are commercial today,” Baratz told CNBC.
Rolls-Royce benefits from the ultra-rich
Rolls-Royce cars on Wednesday said it is investing more than £300 million ($369.9 million) in expanding its global headquarters. The investment will help it meet the growing demand of the already ultra-rich requested custom jewelry 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 lost 0.48% in Wednesday trading, pushing it closer to correction territory, which is generally seen as a 10% drop from a recent high. A Bank of America strategist explains why the benchmark, which includes the 2,000 smallest stocks in the Russell index, faced obstacles in December and can see further problems.
Bottom line
On paper, the minutes of the Fed’s December meeting contained bad news for investors. Officials were concerned about inflation and the impact of Trump’s stated policies (although Trump was not directly named).
“Practically all participants expressed the opinion that the risk of raising the inflation forecast has increased,” the report says. “Participants cited recent stronger-than-expected inflation figures and the likely impact of potential changes in trade and immigration policies.”
As a result, Fed officials see the pace of interest rate cuts slowing down in the future.
Risks to rising inflation, problematic policies for the economy and a smaller-than-expected rate cut: it’s a strong and bitter brew for investors to swallow. The 10-year Treasury yield hit 4.730% in intraday trading, the highest since April.
Still, stocks largely shrugged off that warning to rally on Wednesday. The S&P 500 added 0.16% and Art Dow Jones industrial index grew by 0.25%. The Nasdaq Composite slipped 0.06% — technology stocks as 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 factored in the inflation warning from the Fed most recent dot plotwhich forecast just two cuts of a quarter of a point in 2025, had already rattled markets when it was published in December.
Fed Governor Christopher Waller also offered some help to investors. Speaking in Paris, he said The recent persistence of inflation has been driven mainly by “notional” prices such as housing services, while “observed” prices of other goods and services show a decline in inflation.
Waller added that if economic conditions pan out in his view, he would “support continued reductions in our base rate in 2025.”
What’s not as highly regarded is the US jobs report for December, which is due out on Friday. This could be the next catalyst for the markets.
— CNBC’s Jeff Cox, Sean Conlon and Pia Singh contributed to this report.
