CNBC Daily Open: Wall Street heaves a sigh of relief – CNBC

This report is from today’s international market newsletter CNBC Daily Open. The CNBC Daily Open provides investors with everything they need to know, no matter where they are. Like what you see?You can subscribe here.

wall street rally
U.S. stocks rallied to a record close on Wednesday after the Federal Reserve kept interest rates on hold and maintained plans for three rate cuts this year. The Dow Jones Industrial Average rose 400 points (1.03%). The S&P 500 rose 0.89%, surpassing the 5200 level for the first time, and the Nasdaq Composite Index rose 1.25%.

Congress focuses on US funding to China
In addition to the recent move to effectively ban TikTok, U.S. investments in China have come under intense scrutiny from Congress. After an initial false start, some in the House are moving ahead with legislation to cut off the flow of American capital that allegedly financed Chinese military development.

Reddit IPO price
Reddit priced its IPO at $34 per share, its first major social media offering since 2019. The multi-million online forum host sold 15.28 million shares, with existing shareholders selling an additional 6.72 million shares.according to press releasethe offering brought in $519 million and valued the company at nearly $6.5 billion.

Kuwait Oil CEO talks about Red Sea crisis
The Red Sea crisis could lead to a global tanker shortage, according to the CEO of Kuwait Petroleum Corporation. Sheikh Nawaf Al Sabah told CNBC: “One of our concerns is that if this situation continues for another six months, we probably won’t be able to keep our tanker fleet going. ” he said. Still, he added, there was no risk of supply disruption in the Middle East.

[PRO] weight loss drugs
Vontobel said a new class of weight-loss drugs could hurt Swiss companies with heavy exposure to the food sector. The investment bank estimates that demand for these drugs will increase in the coming years, despite their high costs. “Therefore, the most affected categories are snacks/confectionery, ‘fast food’,” the analysts said.

Wall Street liked what they heard from the Fed, which said it would stick to its third interest rate cut this year.

Fed Chairman Jerome Powell and his officials remain unblinking and appear ready to cut interest rates as long as inflation continues to advance.

This positive signal was reflected in sharp market movements, with all three major stock averages rising to their closing highs. Investors breathed a sigh of relief after recent grim inflation data raised concerns that interest rate cuts would be smaller than expected.

“Despite the disappointing numbers of the past two months, overall the FOMC believes that underlying inflation conditions are improving,” Ian Shepherdson, chairman and chief economist at Pantheon Macroeconomics, said in a note. I firmly maintain that.”

“In other words, they see the latest numbers as a temporary hiatus rather than a change in trend.”

Officials also significantly revised their GDP growth forecast for this year, with the economy expected to grow at an annual rate of 2.1%, up from the 1.4% forecast in December.

Mohamed El-Erian, Chief Economic Advisor of Allianz, said: said in X The Fed appears to be showing considerable patience in two ways.

First, there is a timetable for achieving the 2% inflation target, “signaling an openness to higher levels of inflation for a longer period of time.” The timeline for reaching the target balance sheet size is also indicated by the Fed’s willingness to delay the amount of quantitative tightening. That’s a few months away, he added.

“The first dimension of patience is consistent with the goal of maintaining economic health, and the second dimension reflects a desire to prevent liquidity-related disruptions in market functioning,” he said. explained.

For now, Wall Street appears to have dodged a bullet, and the Fed doesn’t seem to be abandoning its rate cut plan, at least not yet.