Traders work at the New York Stock Exchange on December 17, 2024.
New York Stock Exchange
This report comes from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open keeps investors updated 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
There are cuts now, but there will be fewer in the future
Fed lower interest rates It cut the overnight borrowing rate by 25 basis points on Wednesday to a target range of 4.25%-4.5%. In the Fed’s dot plot showing interest rate expectations for the next few years, the central bank mostly said Only two rate cuts in 2025fewer than the four cuts expected before September.
Bank of Japan keeps interest rates unchanged
Bank of Japan keeps benchmark unchanged on Thursday Interest rates remain unchanged at 0.25%. The yen subsequently fell to a one-month low against the dollar. Analysts are divided on the Bank of Japan’s move: CNBC investigation A Reuters poll of economists showed that 54% of respondents believed the Bank of Japan would keep interest rates unchanged, while Reuters economists expected the Bank of Japan to raise interest rates.
Market sells off sharply
US market Big sell-off on Wednesday. this Dow Jones Industrial Average The price dropped by more than 1,000 points, or 2.58%, marking the tenth consecutive trading day of decline. this S&P 500 Index Down 2.95% Nasdaq Index down 3.56%. Thursday, Asia-Pacific markets As Wall Street plummets. South Korea’s Kospi fell 1.8%, one of the region’s biggest declines.
Micron’s guidance disappoints
shares Micron Following the company’s announcement, the stock price plunged more than 15% in after-hours trading. Weaker-than-expected guidanceeven though it beat earnings estimates last quarter. Micron expects revenue for this quarter to be approximately $7.9 billion. That was well below analysts’ expectations of $8.98 billion, according to LSEG.
(PRO) European Stock Market Outlook 2025
As 2025 approaches, major investment banks have put forward their outlook for the European market in 2025. Cautious optimism turns more bullisheven as nearly all expressed concerns about geopolitics and trade tensions.
bottom line
Wednesday’s sharp sell-off in the market was a stark reminder that forecasts have a far greater impact on stock movements than current conditions.
The Federal Reserve will cut its key interest rate by 25 basis points. Borrowing costs will fall and business investment will be stimulated, creating jobs and boosting economic growth. In theory, this in turn should push stocks higher.
But investors are already confident that the Federal Reserve will cut interest rates on Wednesday. According to the Fed, before the end of the Fed’s December meeting, futures markets are pricing in a 98% chance of a 25 basis point rate cut. CME Group Fed Watch Tool. This means that investors have already priced in the benefits of lower interest rates in the stock market. In other words, yesterday’s rate cut had little impact on stock prices.
Investors may have priced in more than one rate cut. A week ago, investors bet on a 20.8% chance that the Federal Reserve would cut interest rates to 4%-4.25% in January.
Fed Chairman Jerome Powell dashed those hopes.
“With today’s action, we have lowered the policy rate by a full percentage point from its peak, and our policy stance is now significantly less restrictive,” Powell said at the meeting. His post-meeting press conference. “As a result, we can be more cautious when considering further adjustments to policy rates.”
Futures markets showed the chance of a quarter-percentage point rate cut next month fell to 8.6% after the Fed released an updated dot plot showing just two rate cuts in 2025.
It’s this shift — from hopes that the Fed will go all-in on rate cuts to the reality that the Fed might even take its foot off the gas pedal — that is sending shockwaves through markets.
In other words: It’s like waking up at Christmas expecting a gift, only to find out you’ve lost it. This disappointment doesn’t happen any other time of the year.
As David Russell, head of global market strategy at TradeStation, glumly put it, “Goodbye punch bowl. No more Christmas cheer at the Fed.”
—CNBC’s Daria Mercado, Jeff Cox, Yun Li, Brian Evans and Lisa Kailai Han contributed to this report.
