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US stocks were mixed on Wednesday as investors absorbed a report that President-elect Donald Trump is considering declaring a national economic emergency to pave the way for proposed tariffs. Meanwhile, minutes from the Federal Reserve’s December meeting showed “many” officials supported a gradual pace of interest rate cuts in 2025.
The S&P 500 (^GSPC) closed up more than 0.1% while the Dow Jones Industrial Average (^DJI) added 0.25%, or about 100 points. The tech-heavy Nasdaq Composite (^IXIC) closed just below the flat line.
Meanwhile, the 10-year Treasury yield (^TNX) hovered at 4.7% ahead of a crucial December jobs report set for release on Friday morning.
Trump is looking to the emergency powers to provide a legal basis for his proposed hefty and wide-ranging tariffs, CNN reported. The news jolted markets already on guard for Trump surprises as Inauguration Day nears, bracing for a wave of policy moves and executive orders.
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Investors are keeping a close eye on prospects for the economy as they gauge shifts in the chances of slower interest-rate cuts this year.
Stocks sold off and the benchmark Treasury yield spiked on Tuesday as service sector and labor market readings revived concerns over stubborn inflation. The data gives weight to Fed officials’ hints that they will lower rates slower than foreseen, and traders now see a less than 50% chance of any easing before May, according to the CME FedWatch tool.
Markets could switch back to viewing strong economic data releases as negative and a spur to “higher for longer” rates, some analysts believe.
US private companies slowed their headcount growth in December, signaling moderating demand for hiring. But the number of Americans making jobless claims fell unexpectedly last week, pointing to a stable labor market, official figures showed.
The data was released a day early as government offices — as well as the stock market — are closed for a national day of mourning for former President Jimmy Carter on Thursday.
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Stocks move little ahead of quiet day on Wall Street
The S&P 500 (^GSPC) was up more than 0.1% while the Dow Jones Industrial Average (^DJI) added 0.25%, or about 100 points. The tech-heavy Nasdaq Composite (^IXIC) closed just below the flat line.
Meanwhile, the 10-year Treasury yield (^TNX) hovered at 4.7% ahead of a crucial December jobs report set for release on Friday morning.
Markets will be closed leading into jobs day for a national day of mourning for former President Jimmy Carter on Thursday.
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Edison stock falls as California wildfires leave 70,000 without power
Edison International (EIX) stock fell as much as 13% Wednesday after the company shut off power to tens of thousands of customers in Southern California as wildfires raged through the region.
As of Wednesday afternoon, 69,601 customers of Southern California Edison — Edison International’s subsidiary serving the region — were affected by outages, according to the company’s tracker. A separate tracker, poweroutage.us, put the total number of outages across the state much higher, estimating that roughly 400,000 Californians were without power.
At least two people were killed as four separate fires spanning thousands of acres tore through Los Angeles County Wednesday, and local firefighters said they were not equipped to mitigate blazes of such magnitude.
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Here’s why the US dollar is ‘priced to perfection’
The US dollar (DX=F, DX-Y.NYB) extended its rebound on Wednesday, adding to gains after the currency was on track for a one-week low following a report from the Washington Post on Monday that suggested President-elect Donald Trump won’t commit to an aggressive tariff plan.
But just two days later, CNN reported Trump could declare a national economic emergency to enact universal tariffs, pushing the dollar even higher as equities faltered.
The US dollar “is priced to perfection,” Bank of America’s global rates and currencies research team, led by FX analyst Athanasios Vamvakidis, wrote in a note published on Wednesday. “The USD has rallied strongly since the US election, from an already high level.”
The currency’s price action has largely been driven by two main catalysts: Trump’s election and the subsequent Republican sweep, along with the recalibration of future Fed easing in the face of strong economic data.
“American exceptionalism in terms of better economic growth, faster productivity growth, superior equity market performance, and higher yields all act as a collective magnet for attracting capital to the United States,” wrote Blake Millard, director of investments at Sandbox Financial Partners.
Even data that’s often viewed as not so good, like sticky pricing pressures and inflation headwinds, can be positive for the dollar.
“With the Federal Reserve expected to cut rates less than most other major central banks, expected interest rate differentials favor the greenback,” Millard wrote. “Also, tariffs will restrict the flow of goods leading to fewer dollars going abroad and reducing the demand for foreign currency.”
And with most economists in agreement that Trump’s proposed tariff plans will lead to higher inflation over time, the cycle surrounding bullish dollar sentiment remains intact.
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Self-driving tech stock Mobileye falls as competition from Nvidia, Aurora heats up
Mobileye (MBLY) stock dropped 14% Wednesday as the self-driving technology maker’s presentation at the tech industry’s annual CES trade show in Las Vegas failed to impress investors.
The company, which was spun off by the struggling chip giant Intel (INTC) in 2022, is now down 45% from last year. Mobileye scored a deal with Lyft (LYFT) in Nov. 2024 in the ride-hailing app’s push to bring self-driving taxis to its platform.
Meanwhile, competition in the autonomous vehicle technology space is heating up.
Nvidia (NVDA) CEO Jensen Huang put the company’s software tools and chips for self-driving cars at the forefront of his CES keynote, saying that “The AV revolution has arrived.”
“I predict that this will likely be the first multi-trillion-dollar robotics industry,” he added. Nvidia announced partnerships with other Mobileye rivals Aurora Innovation (AUR) and Continental as well as Toyota (TM) and Uber (UBER).
While Aurora shares initially soared 30% on the news Tuesday, the stock dropped 8% Wednesday. Nvidia fell 6% Tuesday after hitting a record close to start the week. The chipmaker traded sideways Wednesday.
Qualcomm (QCOM) also highlighted its autonomous driving tech strategy at CES.
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‘Many’ Fed officials see careful approach for interest rate cuts in 2025
The Federal Reserve opted to cut interest rates by 25 basis points at its final meeting of 2024 in December. The minutes from that meeting, released on Wednesday, revealed that “many” Fed officials supported a gradual pace of interest rate cuts in 2025.
“Many participants suggested that a variety of factors underlined the need for a careful approach to monetary policy decisions over coming quarters,” the minutes read. “These factors included recent elevated inflation readings, the continuing strength of spending, reduced downside risks to the outlook for the labor market and economic activity, and increased upside risks to the outlook for inflation.”
Participants largely expected inflation would continue to move toward its 2% target but noted that “recent higher-than-expected readings on inflation, and the effects of potential changes in trade and immigration policy, suggested that the process could take longer than previously anticipated.”
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A case for the Fed not cutting interest rates in 2025
There’s been increasing debate on Wall Street about when, or if, the Federal Reserve will cut interest rates in 2025.
Evercore ISI vice chairman Krishna Guha’s base case is for the Fed to cut twice this year. But in a note to clients on Wednesday he provided a clear example of why the Fed could not cut interest rates at all this year.
“Bumpier inflation data, some renewed strength in the labor market plus more max-reflationary Trump actions lead the Fed to raise its inflation forecast more in March, and skip a March cut,” Guha wrote.
From there, there is no growth shock for the US economy and unemployment stabilizes or falls. Tariffs or wage-growth led inflation worries would then come back into view too.
“As of June the Fed judges that the economy does not need cuts to maintain a healthy labor market, and with policy plausibly not far from short-run neutral, and actual inflation set to move higher in 2H under tariff and immigration policy shocks and tax cuts ahead, decides to simply stay on hold and police the passthrough of these shocks, even though much of the inflation is in principle a onetime price level shock, in light of recent years’ experience,” Guha said of this scenario.
He added, “Fed officials might well anticipate that they might cut a bit more in 2026, but the market would likely price the end of the cycle, and the first hike 12 to 18 months after the last cut – so around the start of 2026.”
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New data points to ‘stable’ job market amid ‘low layoffs, low quits’
New economic data showed showed hiring in the US labor market continues to slow, but layoffs remain low.
Data from ADP Wednesday morning showed 122,000 private payrolls were added in December, down from the 144,000 additions seen in November.
Meanwhile, the latest reading of initial jobless claims from the Department of Labor showed 201,000 claims for unemployment benefits were filed in the week ending Jan. 4, a drop of 10,000 from the previous week and below the 215,000 expected by economists.
ADP chief economist Nela Richardson told Yahoo Finance that a low number of layoffs remains key to why the labor market is “stable” for now.
“That’s precisely why [we saw] stability in the 2024 labor market,” Richardson said. “You had low layoffs, low quits.”
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Bitcoin drops to hover below $94,000 per token
Bitcoin (BTC-USD) extended losses for a second day as the world’s largest cryptocurrency hovering just below the $94,000 level.
The token fell more than 3.5% over the past 24 hours amid a broader market sell-off over worries of tariffs from the incoming Trump administration along with the prospect of a slower rate cut policy by the Federal Reserve if inflation remains sticky.
Bitcoin had surged to above $102,000 on Monday before rapidly declining on Tuesday. The token continued to fall on Wednesday as the markets remained on edge over Trump’s tariff policy.
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EBay shares soar after Meta says it will allow listings on Facebook Marketplace in US, Germany, and France
EBay stock (EBAY) rose 11% on Wednesday after Meta (META) announced it will test listings from the e-commerce platform on Facebook Marketplace in the US, Germany, and France.
Meta’s announcement comes after the European Commission fined the company in November for breaching antitrust rules by tying Marketplace to its personal social network Facebook.
“While we disagree with and continue to appeal the European Commission’s decision on Facebook Marketplace, we are working quickly and constructively to build a solution which addresses the points raised,” Meta wrote in a blog post Wednesday.
“Today, we will launch a test in Germany, France, and the US that will enable buyers to browse listings from eBay directly on Facebook Marketplace while completing their transaction on eBay. This could benefit people using both platforms,” said the post.
Meta shares were down roughly 1% on Wednesday.
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Quantum computing stocks tank after Nvidia CEO suggests technology decades away
Quantum computing-related stocks took a hit on Wednesday after Nvidia (NVDA) CEO Jensen Huang suggested the computing technology is probably two decades away.
During a question-answer session with analysts on Tuesday, Huang said, “If you kind of said 15 years for very useful quantum computers, that would probably be on the early side. If you said 30, it’s probably on the late side.”
“If you picked 20, I think a whole bunch of us would believe it,” he added.
On Wednesday, Rigetti Computing (RGTI), IonQ (IONQ), and D-Wave Quantum (QBTS) all fell more than 40%.
The quantum computing-related stocks were among the top trending tickers on Yahoo Finance’s platform on Wednesday.
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Walmart CEO Doug McMillon meets with Trump ahead of inauguration
Walmart (WMT) CEO Doug McMillon sat down with President-elect Donald Trump on Tuesday, sources told Yahoo Finance.
The one-on-one meeting at Trump’s Mar-a-Lago estate comes less than two weeks before he takes office for the second time.
“Doug enjoyed reconnecting with President Trump on a range of topics,” a Walmart spokesperson said, adding that it was a “great conversation.”
McMillon served on one of Trump’s advisory councils before it was disbanded in August 2017, then on a special task force in response to the COVID-19 pandemic in April 2020.
The possibility of tariff hikes remain a top issue for retail giant Walmart. Trump has floated a range of new measures, such as an 10% tariff on all imports and 60% levies on Chinese imports, in a bid to lower the trade deficit.
Such tariffs could hit the retail chain’s profit thanks to an elevation in costs. Walmart might have pass along that cost to consumers who are healthy, but price sensitive, heading into 2025.
Read more here.
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Fed’s Waller still sees rate cuts in 2025 despite Trump tariff talk
Yahoo Finance’s Jennifer Schonberger reports:
Federal Reserve governor Chris Waller said Wednesday that he still supports cutting interest rates this year, believing inflation will continue to drift lower despite promises of sweeping tariffs from the new Trump administration.
“I believe that inflation will continue to make progress toward our 2% goal over the medium term and that further reductions will be appropriate,” Waller said during a speech in Paris.
While Waller underscored that tariff proposals raise the possibility of a “new source of upward pressure on inflation,” he noted projections of their economic impact vary widely.
Read more here.
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Moderna stock seesaws as first US bird flu death puts vaccine development in focus
Yahoo Finance’s Laura Bratton reports:
Moderna stock (MRNA) has seen big swings this week after the first reported bird flu death in the US, which has put its development of a vaccine in focus.
The stock jumped over 10% on Tuesday before reversing course and losing over 5% early Wednesday.
In July 2024, Moderna was awarded $176 million from the US government to advance the development of its mRNA H5N1 (bird flu) vaccine, which is in the early stages of testing. The award came after an outbreak of the virus in cows infected three dairy workers, prompting concerns of an outbreak in humans.
Read more here.
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Stocks wobble as tariff possibilities put markets on edge
Stocks wobbled at the open on Wednesday as investors assessed a news report that President-elect Donald Trump is considering declaring a national economic emergency.
The S&P 500 (^GSPC) was little changed, while the tech-heavy Nasdaq Composite (^IXIC) fell to just below the flat line. The Dow Jones Industrial Average (^DJI) was also broadly flat, after volatile premarket trading.
DJI – Delayed Quote USD
42,635.20 – (+0.25%) At close: 4:43:30 PM EST
Investors are on edge over the prospect of slower interest rate cuts this year if inflation remains sticky.
Meanwhile, Federal Reserve governor Chris Waller said he still supports cutting interest rates this year. He believes inflation will continue to drift lower, despite promises of sweeping tariffs from the new Trump administration.
A CNN report on Wednesday morning said Trump is looking to the emergency powers to provide a legal basis for his proposed hefty and wide-ranging tariffs.
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Trump tariff bluster continues to push around markets
Another day, another report suggesting President-elect Donald Trump will look for creative solutions to impose broad tariffs on America’s trading partners.
CNN’s Kayla Tausche reported early Wednesday that Trump “is considering declaring a national economic emergency to provide legal justification for a large swath of universal tariffs on allies and adversaries.”
Following the report, stock futures pared gains and traded into negative territory.
About an hour before the market open, futures were little changed.
Wednesday’s market reaction is the inverse of what investors saw Monday when a report from the Washington Post suggested Trump may look to narrow the scope of his tariff proposals. After markets cheered that story, the president-elect denied it.
But the back-and-forth seen in the major stock indexes on Trump’s tariff bluster continues to play second fiddle to the most important factor for investors right now: the Federal Reserve.
Tuesday’s sell-off is the latest case in point.
Inflation data inside the ISM’s latest manufacturing PMI report, coupled with job openings data that showed an uptick in labor demand during November, saw markets price out another 0.25% rate cut from the Fedin 2025.
In turn, the Nasdaq fell almost 2% with stalwarts like Nvidia (NVDA) losing 6% after reaching an all-time high earlier in the session.
As Trump’s inauguration approaches, investors and newshounds will see many echoes of the run-up to his 2017 inauguration in recent newsflow — everything is on the table: renaming bodies of water, annexing Greenland, and so on.
Because markets don’t jump to price in the maximum risk posed by every Trump proposal doesn’t mean they don’t matter.
But the Fed meets times a year to vote on monetary policy, and interest rates are the most important driver of stock prices over the long term.
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Good morning. Here’s what’s happening today.
