Despite a two-day winning streak in the stock market, U.S. Federal Reserve policymakers are raising concerns about the potential impact of tariffs on the economy. This report from CNBC Daily Open explores the tension between market optimism and the looming threat of trade war.
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. If investors were to judge the stability of the economy by looking at the stock market , its two-day winning streak might lead investors to think that it's business as usual. The market's response to corporate earnings would also support that thesis.
Investors are selling off companies that didn't meet their expectations, such as Google-parent Alphabet and Advanced Micro Devices, and flocking to firms that they think will do even better in the future, like Palantir. (Whether that's a fair, or even realistic, belief is up for debate – but it's certainly not out of the ordinary.) But U.S. Federal Reserve policymakers are being unusually open about their concerns over the potential impact of tariffs. If investors listen to them, they will perhaps find that the calm in markets is deceptive. That's a break from Fed officials' typical stance of not commenting on fiscal policy, suggesting that tariffs could have serious effects on the U.S. economy.Google on Wednesday released Gemini 2.0, its latest artificial intelligence model suite, to the public. It's part of Google's effort to advance its AI capabilities, which can complete complex multistep tasks on a user's behalf, rather than a user having to walk them through every individual step. Meanwhile, Qualcomm reported better-than-expected quarterly results, with revenue beating expectations and up 18% from $9.92 billion a year ago. Net income increased 15% to $3.18 billion from $2.77 billion a year earlier. Automotives are the chipmaker's fastest-growing business — Qualcomm reported $961 million in quarterly sales for them, growing 61% on an annual basis. However, its shares fell more than 4.6% in extended trading. Investors were concerned that revenue from Qualcomm's licensing business would remain flat, while revenue rose 4.8% from a year earlier. Disney also reported earnings, with Disney+, the company's streaming platform, being profitable during the quarter, but experiencing a 1% drop in subscribers. Shares fell 2.4% after reporting stronger-than-expected fourth quarter results and guidance. Even though the stock gave up some of those gains on Wednesday, the software company's valuation appears way out of market fundamentals.CNBC Pro's John Melloy and Christopher Hayes After hitting Mexico, Canada and China with tariffs — though those on the former two countries have been paused — Trump told reporters on Sunday that tariffs on the EU 'will definitely happen.' However, Trump said a deal 'could be worked out' with the U.K., a nation with which U.S. trade is more balanced. As the British economy struggles, several analysts told CNBC the economy could get a boost from Trump's trade war. Get the CNBC Daily Open report in your inbox every morning and keep up to date with the markets wherever you are
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