This report is from today's CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed 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
A dovish Fed
The U.S. Federal Reserve left its key interest rate range unchanged Wednesday at 5.25%-5.5%. Fed officials also penciled in three quarter-point cuts by the end of 2024, which would bring the rate to 4.5%-4.75%. Alongside those cuts, the central bank predicts the core personal consumption expenditures index to fall to 2.4% next year.
Markets jumped
U.S. markets popped Wednesday on dovish Fed. The Dow Jones Industrial Average hit a record high, while U.S. Treasury yields fell, with the 10-year yield touching its lowest level since August. Most Asia-Pacific markets rallied Thursday, with the exception of Japan's Nikkei 225. India's Nifty 50 index added around 1% — and could keep rising because of a confluence of positive factors.
Skyrocketing SpaceX valuation
Elon Musk's satellite launch company SpaceX is in talks with investors to sell stock from insiders at $97 a share. This gives SpaceX a valuation of $180 billion, a 20% increase from its previous high of $150 billion. It also makes the company more valuable than any U.S. defense contractor, including Boeing, Lockheed Martin and Northrop Grumman.
'Mafia-style intimidation'
Chinese low-cost online retailer Temu has filed a lawsuit against its rival Shein over copyright concerns and "mafia-style intimidation of suppliers," a filing on Wednesday showed. Shein's beginning "to illegally detain merchants, forcibly asking for their phones, stealing our merchant accounts and passwords," said a Temu spokesperson. The two companies have had a history of suing each other.
[PRO] Opportunities after devaluation
Under new president Javier Milei, Argentina devalued its currency by 50%. One U.S. dollar will now fetch 800 Argentine pesos, up from 400 pesos earlier. That presents investing opportunities in three U.S.-listed stocks of Argentine companies, said Citi.
The bottom line
The Federal Reserve's meeting yesterday showed monetary policy's still effective — and it still has an outsized impact on financial markets.
The most important takeaways from the meeting:
- In its dot plot, the Fed indicated three 75-basis-point cuts for 2024, one more than what it had previously penciled in.
- The Fed statement said the committee would consider multiple factors for "any" more policy tightening — a word that hadn't appeared previously — suggesting hikes might be over.
- That's because "inflation has eased from its highs, and this has come without a significant increase in unemployment," Fed Chair Jerome Powell said at his press conference.
- Powell also acknowledged "economic activity has slowed substantially from … the third quarter." But "GDP is on track to expand around 2.5% for the year as a whole."
To sum up: The U.S. economy's on track for a soft landing, with rate cuts coming next year.
Major stock indexes jumped on that dovish — and dare I say it — optimistic Fed meeting, closing at fresh 52-week highs. The Dow Jones Industrial Average rose 1.4% to close at 37,090.24, the first time it's broken the 37.000 level. The S&P 500 popped 1.37% to finish Wednesday at 4,707.09, trading above 4,700 for the first time since January 2022. The Nasdaq Composite climbed 1.38%, taking its gains to 40.8% so far this year.
Other assets also celebrated the Fed meeting outcome. Treasury yields fell drastically (when yields drop, prices increase), with the 10-year yield falling below 4% and the 2-year sinking more than 30 basis points. Bitcoin spiked around 4% to $42,800.72.
"The Fed has given the market an early holiday gift today when, finally, for the first time, they have commented positively about inflation," said Gina Bolvin, president of Bolvin Wealth Management Group. "It appears that the Fed is moving in the market's direction, rather than the market moving towards the Fed. The Santa Claus rally may continue."
That's just what investors want to hear, going into the holiday season.
— CNBC's Jeff Cox contributed to this report.
