Feed rate cutting path in sharp focus

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Traders react as a screen displays the Fed’s rate announcement on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., December 13, 2023. REUTERS/Brendan McDermid

Brendan McDermid | Reuters

This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open gives investors access to everything they need to know, wherever they are. Like what you see? You can subscribe here.

What you need to know today

Wall Street finishes high
US stocks ended on a positive note on Monday. The S&P 500 closed at a new high as Wall Street looked ahead to Big Tech earnings and the Federal Reserve’s rate policy decision. The Dow also closed higher, while the Nasdaq Composite saw the best performance of the three major indexes, up more than 1% in the session.

DOJ and SEC make cryptocurrency fraud charges
The Department of Justice and the Securities and Exchange Commission have disclosed charges in a $1.9 billion cryptocurrency fraud scheme known as HyperFund, among other names. Erek Barron, the US attorney for Maryland, said, “The level of fraud alleged here is staggering.”

Amazon deals with iRobot
Amazon said it would end the planned acquisition of iRobot vacuum cleaners, with both companies saying in a press release that there was “no path to regulatory approval for the deal.” ” iRobot shares down as much as 10% on the news, before plunging into losses.

Biden under pressure to hit Iran
President Joe Biden is facing pressure from Republicans in Congress to hit Iran after three US soldiers were killed in Jordan in a drone strike claimed by the Islamic Resistance in Iraq, a militia group supported by from Iran. The deadly attack comes amid rising tensions in the Middle East since the latest Israel-Hamas war broke out on October 7.

[PRO] Meta pole position
Meta Platforms will likely outperform the other so-called “Magnificent Seven” stocks during this earnings week, according to Altimeter Capital Chairman and CEO Brad Gerstner. He is particularly optimistic about Meta’s artificial intelligence tools to boost currency.

The bottom line

Wall Street is on Fed watch again.

The timing of interest rate cuts is certainly the main topic on most investors’ minds.

The market is widely expecting the central bank to keep rates unchanged at the Fed’s two-day meeting, which ends on Wednesday.

However, investors hope that the Fed will give strong signals on the way for interest rates, especially when they could be cut.

Economists are currently divided on the timing of rate cuts. Some expect the Fed to move as early as March, while others expect a rate cut sometime in May or June.

Recent good economic news could influence the central bank’s decision.

Inflation is certainly approaching the Fed’s 2% target rate. The December personal consumption expenditure price index, the Fed’s main inflation gauge, was released on Friday. It rose 0.2% in the previous month and 2.9% annually.

On Thursday, a government report showed that the US economy grew at a faster pace in the last three months of 2023, ending the year on a solid note.

Both data could give the Fed a green light to start cutting interest rates later this year. However, the Fed may prefer to err on the side of caution and delay rate cuts as much as possible, until its confident inflation is firmly under control.

We hope that the policy meeting in January will provide more clarity on which direction the Fed will decide to take.

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