CNBC Daily Open: Wall Street anxious over Fed concerns

CNBC Daily Open:  Wall Street anxious over Fed concerns

U.S. Federal Reserve Board Chairman Jerome Powell speaks during a news conference at the headquarters of the Federal Reserve on January 31, 2024 in Washington, DC. The Federal Reserve announced today that interest rates will remain unchanged. 

Anna Moneymaker | Getty Images

This report is from today’s CNBC Daily Open, our 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

China spike
China and Hong Kong stocks rose on Tuesday, while
most Asia-Pacific markets fell. The CSI 300 index and Hong Kong’s Hang Seng index advanced about 3.3% each, after Beijing took measures to prevent a recent sell-off in its equities. Overnight, U.S. stocks lost ground and Treasury yields rose amid lingering concerns that the Federal Reserve may not cut rates as much as expected. The  Dow fell over 200 points, while the S&P 500 also slumped after hitting a record high last week. The Nasdaq lost 0.2%. 

UBS earnings beat
UBS narrowly exceeded earnings estimates. The Swiss banking giant announced plans to restart share buybacks worth up to $1 billion in the second half of the year. The bank also plans to propose a dividend per share of 70 cents, up 27% year-on-year.

China boosts support
Financial authorities in China have resorted to various measures aimed at stemming its stock market rout. These steps include boosting the liquidity in the market as well as warnings against malpractices.

Oil’s supply crunch
The oil market faces a supply crunch by the end of 2025 as the world is not replacing crude reserves fast enough, according to Occidental CEO Vicki Hollub. About 97% of the oil produced today was discovered in the 20th century, she told CNBC. 

[PRO] Banking allure
The banking sector offers attractive opportunities despite an increase in volatility, according to fund manager Cole Smead. “It’s the banks that made bad decisions that are making [other] banks look attractive in pricing,” Smead told CNBC, who picked two bank stocks that are in play. 

The bottom line

Investors are once again getting ahead of themselves on the Fed’s next move.

Markets were rattled after Federal Reserve Chair Jerome Powell reiterated the central bank is unlikely to rush to lower interest rates. 

Wall Street has been parsing his hawkish comments, yet in essence what Powell said over the weekend was no different than what he shared at Wednesday’s press conference: that he wants to see more evidence that inflation is coming down to a sustainable level.

Still, the debate over the timing of rate cuts unsettled Fed watchers.  

This sparked a sell-off spurred by higher bond yields. The yield on the 10-year Treasury spiked for a second day, trading around 4.163%. Typically, higher yields tend to indicate investors think the Fed will take longer to cut rates. 

Fresh data out Monday also didn’t help.  A new survey showed the U.S. services sector expand at a faster-than-expected clip in January. 

This on top of the booming jobs report released Friday, fueled investor worries that rates may stay elevated for much longer.

Wall Street will now look ahead to the swath of Fed speakers this week. Perhaps they will shed more light on the path for rate cuts.