In search of certainty, markets find volatility - ORSOLTECH

A television station on the floor of the New York Stock Exchange broadcasts a speech by Jerome Powell, Chairman of the US Federal Reserve, after the Federal Open Market Committee meeting on 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. Asia Pacific markets Dropped on Friday. Australia Standard & Poor's/ASX 200 It fell 1.24% to the lowest intraday level in three months before recovering some losses. Chinese and Japanese markets fell after the release of separate economic data from the two countries' agencies.

Interest rate and inflation updates
The People's Bank of China on Friday left key interest rates on one- and five-year loans Unchanged at 3.1% and 3.6%respectively. Meanwhile, Japan's “core” inflation rate, which excludes fresh food and energy – and which the Bank of Japan tracks – It rose to 2.4% in November. This number is the highest since April.

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.

(PRO) “Truck Backup” moment.
The S&P 500 fell on Wednesday and continued to decline slightly on Thursday. This is a “return the truck” moment, said Tom Lee, head of research at Fundstrat Global Advisors. This suggests that now, on the contrary, is a good time to buy stocks. These are the trends that Lee is looking at Support his hypothesis.

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 the central bank's target of 2%.

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.