CNBC Daily Open: Investors find cheer amid Fed's hawkish cut
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In this article Taken from CNBC’s Daily Open, our international markets newsletter — Subscribe today It ended up being a "hawkish cut," as expected. Still, investors managed to find a few gifts tucked between the lumps of coal.Even though the U.S. Federal Reserve lowered interest rates on Wednesday stateside, two regional bank presidents — Jeffrey Schmid of Kansas City and Austan Goolsbee of Chicago — wanted rates to stand pat.Their cautioned was echoed in the Fed's "dot plot" of rate projection, which showed officials penciling in just one cut in 2026 and another for 2027.Even the Fed's rate statement was repurposed from the December 2024 meeting, which ushered in a nine-month period without cuts until September this year.Why, then, did U.S. markets rise after the meeting?The biggest surprise was the Fed's announcement that it would begin purchasing $40 billion in Treasury bills, starting Friday. That move increases the money supply in the economy. In other words, it's a stealthy way to ease conditions, which helps support financial markets.Next, Chair Jerome Powell dismissed speculation about future hikes."I don't think that a rate hike ... is anybody's base case at this point," Powell said. "I'm not hearing that."Fed officials also see the U.S economy as remaining resilient. Collectively, they increased their forecast for economic expansion in 2026 to 2.3% from an earlier estimate of 1.8% in September."We have an extraordinary economy," said Powell.And the markets may be setting up for an extraordinary finish to the year."The last interest rate decision of 2025 has essentially paved the way for a Santa Claus rally to end the year, and the S&P 500 is poised to exceed the 7,000 milestone in the next few weeks," said José Torres, senior economist at Interactive Brokers.For investors, that would count as a very decent Christmas surprise. — CNBC's Jeff Cox contributed to this report.The Fed cuts rates by a quarter percentage point. That brings the targeted range of U.S. interest rates to 3.5%-3.75%. The decision was not unanimous: two members from the 12-member voting committee wanted rates unchanged, while one wanted a larger cut.But Trump thinks the cut should have "at least doubled." At the White House meeting on Wednesday where he made the comments, the U.S. president also said he plans to interview former Fed Governor Kevin Warsh for the position of Fed chair later Wednesday.U.S. stocks climb after digesting Fed meeting.
The Dow Jones Industrial Average popped 1.1% on Wednesday, rising alongside other major indexes. Europe's Stoxx 600 was mostly flat. Delivery Hero shares spiked 13.7% after the company said it's reviewing its strategy.Oracle misses revenue expectations. The company's fiscal second-quarter revenue grew 14% from a year ago to $16.06 billion, but missed Wall Street's mark. Oracle's earnings and AI backlog topped estimates. Shares tumbled more than 11% in extended trading.[PRO] Goldman Sachs likes these energy stocks. The bank's monthly "Conviction List," a selection of stocks it recommends buying, features several energy stocks. One name is "underappreciated," and another is likely to provide "continued buybacks."Trump slams European leaders as 'weak' — just as they're trying to impress himU.S.
President Donald Trump has once again provoked outrage among his European allies, describing them as "weak" in an interview with Politico published Tuesday. Criticizing the region's response to the war in Ukraine, Trump said: "I think they don't know what to do."That comment will be jarring for Europe after its efforts to support Ukraine — efforts which Trump has frequently downplayed. Instead, Europe has had to watch on as U.S. officials have held talks with their Russian and Ukrainian counterparts on a draft peace plan for Ukraine, without a seat at the table. — Holly EllyattGot a confidential news tip? We want to hear from you.Sign up for free newsletters and get more CNBC delivered to your inboxGet this delivered to your inbox, and more info about our products and services.© 2025 Versant Media, LLC.
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