Greater certainty of increased volatility - ORSOLTECH

A television station broadcasts on the floor of the New York Stock Exchange (NYSE) in New York, United States, US Federal Reserve Chairman Jerome Powell, on Wednesday, December 18, 2024.

Michael Nagel | Bloomberg | Getty Images

This report is from today's CNBC Daily Open, the international markets newsletter. CNBC Daily Open works to provide investors with quick 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 may force the hand of global banks
The US Federal Reserve indicated on Wednesday that it is We expect smaller interest rate cuts in 2025 Which was previously expected, led to turmoil in the markets and strengthened the dollar. Global central banks insist that their monetary policy is independent of the Fed, but such currency movements can be just as well. Force them to act.

Markets decline but Dow Jones snaps losing streak
Thursday, Standard & Poor's 500 and Nasdaq Composite decreased marginally, and Dow Jones Industrial Average He made little gains for Breaking his losing streak. Pan-European Stokes 600 Decreased by 1.51% Worst day since November 12th. Norges Bank kept interest rates unchanged at 4.5%, and the Riksbank cut interest rates by 25 basis points to 2.5%.

Partial US government shutdown?
A House Republican bill would fund the government for three months and suspend the debt ceiling for two years Failed to pass Thursday night. Thirty-eight Republicans joined most Democrats to vote against the bill dealApproved by US President-elect Donald Trump. Without an agreement and legislation passed, the partial US government shutdown is scheduled to begin late Friday night.

The Bank of England holds interest rates
The Bank of England left its headquarters on Thursday The key interest rate remains unchanged at 4.75%.In November, headline inflation reached Highest level in eight months by 2.6%. While this decision was in line with expectations, the MPC vote surprised markets. Three members of the committee voted in favor of lowering interest rates, which is two more than expected in a Reuters poll.

(PRO) Trade markets amid volatility
the CBOE Volatility IndexThe Wall Street Fear Index, known as the Wall Street Fear Gauge because it measures the relative strength of 30-day price changes, jumped on Thursday after the Fed meeting, though it has cooled slightly since then. Despite those concerns, there is opportunity in volatility – here it is How to trade in the markets In times like these.

Bottom line

If we take an objective view, the major US indices did not change much during Thursday's trading session.

The S&P 500 fell 0.09%, the Nasdaq Composite fell 0.10%, but the Dow Jones Industrial Average rose 0.04%.

But when viewed in the context of Wednesday's market rout, the direction of those shifts also gives a hint, however faint, of the narrative driving the markets.

To rephrase Thursday's stock market in these terms: Stocks continued to fall mostly after the Fed unleashed its forecasts, but the Dow finally broke its 10-day losing streak.

It's kind of a mixed bag. Should investors continue to tread cautiously due to the downward trend? Or should they view the Dow Jones breakout as a ray of light at the end of the tunnel?

As with all things in the markets, there are no clear answers. The only thing more certain is that data points, such as the November US PCE price index, will impact markets more strongly than before.

“Whatever the reaction is, it will likely be sharper one way or another than it was before we actually saw the Fed increase those expectations,” said Mike Dixon, head of quantitative research and strategies at Horizon Investments. , referring to Fed forecasts The PCE rate will come in above its 2% target.

In fact, Wall Street's fear gauge rose 74% to 27.62 on Wednesday The second largest jump in its history. Although the VIX index slowed 12.8% on Thursday, it still closed above 20 – a sign of high levels of fear in the market.