More certainty about increased volatility
A television station on the floor of the New York Stock Exchange (NYSE) in New York, U.S., broadcasts Federal Reserve Chairman Jerome Powell on Wednesday, December 18, 2024.
Michael Nagel | Bloomberg | Getty Images
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What you need to know today
The Fed could force global banks to act
The US Federal Reserve indicated this on Wednesday Fewer interest rate cuts are expected for 2025 than previously forecast, roiled markets and increased the strength of the dollar. Global central banks insist their monetary policy is independent of the Fed, but such currency moves could be force them to act.
Markets fall, but Dow breaks losing streak
On Thursday, the S&P 500 And Nasdaq Composite decreased slightly, and the Dow Jones Industrial Average made a small profit break his losing streak. The pan-European Stoxx 600 fell by 1.51% worst day since November 12th. Norway’s Norges Bank left its interest rate unchanged at 4.5% and Sweden’s Riksbank cut its rate by 25 basis points to 2.5%.
Partial shutdown of the US government?
A Republican bill in the House of Representatives to fund the government for three months and suspend the debt ceiling for two years failed on Thursday evening. Thirty-eight Republicans joined most Democrats in voting against it actwhich was endorsed by US President-elect Donald Trump. Without an agreement and the passage of a law, a partial shutdown of the US government is likely to begin late Friday evening.
The Bank of England maintains interest rates
The Bank of England exited its account on Thursday Key interest rate unchanged at 4.75%when headline inflation peaked in November Eight-month high of 2.6%. While this decision was in line with forecasts, the Monetary Policy Committee’s votes surprised markets. Three members of the committee voted in favor of cutting interest rates, two more than predicted in a Reuters poll.
(PRO) Trading the markets amid volatility
The CBOE volatility indexCommonly known as Wall Street’s fear gauge because it measures the relative strength of 30-day price changes, it jumped Thursday after the Fed meeting but has since calmed somewhat. Despite these concerns, volatility also presents opportunities – here how to trade in the markets in such times.
The end result
From an objective perspective, major US benchmarks were little changed during Thursday’s trading session.
The S&P 500 slipped 0.09% and the Nasdaq Composite fell 0.10%, but the Dow Jones Industrial Average rose 0.04%.
But when viewed against the backdrop of Wednesday’s market decline, the direction of these shifts also provides a clue, albeit a weak one, to the narrative animating markets.
To paraphrase the stock market on Thursday, after the Fed released its forecast, stocks mostly continued to slide, but the Dow finally snapped its 10-day losing streak.
It’s kind of a mixed bag. Should investors continue to be cautious given the downtrend? Or should they view the Dow Jones breakthrough as a ray of hope at the end of the tunnel?
As with all things in the markets, there are no clear answers. The only thing that is certain is that data points like today’s price index for private consumer spending in the US for November will influence the markets more than before.
“Whatever the reaction is, it’s probably going to be more severe in one way or another than it would have been before the Fed really raised those expectations,” said Mike Dickson, head of research and quantitative strategies at Horizon Investments , related to the Fed forecast that PCE will be above its 2% target.
In fact, Wall Street’s fear indicator rose 74% to 27.62 on Wednesday the second largest jump in its history. And although the VIX cooled 12.8% on Thursday, it still closed above 20 – a sign of heightened fear in the market.
It’s somewhat ironic, but volatility may be the only thing safer now.
— CNBC’s Sarah Min, Sean Conlin, Brian Evans and Pia Singh contributed to this report.
