New highs on Wall Street, Fed’s Waller says rate cuts are months away

Traders work on the floor of the New York Stock Exchange during morning trading on May 17, 2024 in New York City.

Angela Weiss | AFP | fake images

This report is from today’s CNBC Daily Open, our new international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. You like what you see? You can subscribe here.

Wall Street reaches new highs
The S&P 500 and Nasdaq Composite hit new all-time highs as investors await earnings from AI chipmaker Nvidia after the close on Wednesday. The Dow Jones Industrial Average closed up 0.17% at 39,872.99. Nvidia shares rose 0.6% and options traders priced swings of up to 9% up or down in reaction to its gains. Treasury yields fell and oil prices fell.

Rate cuts are several months away
Federal Reserve Governor Christopher Waller said he does not believe further rate increases are necessary, but will need convincing before backing any rate cuts. “I need to see several more months of good inflation data before I feel comfortable supporting an easing of the monetary policy stance,” Waller said. According to the CME Group’s FedWatch tool, the first rate cut could occur as early as September.

Gasoline reserve release.
The Biden administration will release 1 million barrels of gasoline from reserves to reduce prices at the pump before the July 4 holiday. OPEC production cuts and fears that the war between Israel and Hamas could affect the entire Middle East sent US gasoline futures soaring 19%. “By strategically releasing this stockpile between Memorial Day and July 4, we are ensuring sufficient supply flows to the tri-state (region) and the Northeast at a time when working Americans need it most,” he said Secretary of Energy, Jennifer Granholm.

Job cuts at Pixar
Pixar Animation Studios will lay off about 175 employees or about 14% of its workforce, a spokesperson for parent company Walt Disney told CNBC. CEO Bob Iger wants Pixar to focus on box office releases and not short series for Disney+. Pixar and Walt Disney Animation have struggled to generate more than $480 million at the global box office since 2019. Before the pandemic, “Coco” generated $796 million globally, while “Incredibles 2” grossed $1.24 billion dollars and “Toy Story 4” got $1.07. billion worldwide.

Singapore Airlines: one dead and 30 injured
One person has died and 30 have been injured aboard a Singapore Airlines flight that suffered severe turbulence and was forced to land in Thailand. Singapore Airlines Flight 321 encountered “sudden and severe turbulence” about 10 hours into the flight from London to Singapore, the airline said. The Boeing 777-300ER aircraft was carrying 211 passengers and 18 crew members.

(PRO) Stubborn Bear
With the S&P 500 index up more than 11% so far this year, Wall Street strategists have been revising their previously pessimistic outlook for the benchmark index. Against this backdrop, CNBC’s Jesse Pound explores why JPMorgan’s Marko Kolanovic maintains his negative outlook on the stock.

Few CEOs have the strong will and the vision or the audacity to redefine their industries. Steve Jobs revolutionized mobile phones with the iPhone, Elon Musk challenged the dominance of gas-guzzling Detroit with electric vehicles, and JPMorgan Chase CEO Jamie Dimon has done the same with the often-criticized gray banking industry. .

Dimon might seem like an unusual addition to this list of innovators. Yet he took a bank that ranked eighth on Wall Street in 2006 and propelled it to the top spot in five years, surpassing giants like Goldman Sachs, Deutsche Bank and Citi.

However, Dimon’s inclusion here is not solely due to his bank’s impressive growth. Like his peers, he is not afraid to take on his big institutional investors. This was evident at a recent investor day, where the headline focused on his potential retirement in the next five years.

When asked when the bank would buy back its own shares, Dimon’s response was unequivocal: “I want to make it very clear, okay? We’re not going to buy back many shares at these prices.”

He went on to say, “Buying back shares of a financial company at more than twice tangible book value is a mistake. We’re not going to do it.” CNBC’s Hugh Son covered this exchange in detail, providing more insight into the Share Buyback Debate.

Unlike CEOs of companies like Apple, Alphabet and Meta, who succumbed to pressure and used their vast cash reserves to buy back shares, Dimon bucks this trend. Share buybacks primarily benefit large investors by inflating the value of their holdings.

Dimon could have easily agreed, considering his estimated net worth of $2.2 billion, largely tied to his banking holdings. Critics might argue that it is easy for him to give up additional wealth, given his substantial $36 million compensation package in 2023.

However, it is undeniable that Dimon has successfully navigated nearly two decades of banking crises, recessions, and a volatile political climate. He has turned JPMorgan Chase into the largest bank in the United States by assets, with a market capitalization close to $600 billion, and at 68 years old it is still going strong.

— CNBC’s Jeff Cox, Hakyung Kim, Alex Harring, Sophie Kinderlin, Leslie Josephs, Hugh Son, Spencer Kimball and Sarah Whitton contributed to this report.