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A bumpy ride to beating inflation

A trader works, as a screen displays a news conference by Federal Reserve Board Chairman Jerome Powell following the Fed rate announcement, on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., January 31, 2024. 

Brendan McDermid | Reuters

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 

Wall Street rebounds
U.S. stocks
climbed on Wednesday as Wall Street rebounded modestly from the previous session when hotter-than-expected inflation data tanked stocks. The benchmark S&P 500 rose 0.96%, while the Nasdaq Composite advanced 1.3%. The blue-chip Dow also ended higher, adding over 100 points.

BRICS millionaires soar
A report by Henley & Partners forecast that BRICS nations will see an 85% jump in millionaires over the next decade, exceeding the rise in G7 countries. “The 85% forecast for BRICS will be the highest wealth growth of any bloc or region globally,” Andrew Amolis, wealth analyst at New World Wealth told CNBC.

AI scammers
While data showed one in four firms now ban their employees from using generative AI, that’s not doing enough to protect them falling prey to financial scams that deploy the technology. Al financial scammers are becoming especially good at duping work email.

Cisco job cuts
Cisco plans to slash 5% of its workforce, about 4,250 people. It is the latest tech company to downsize this year as the sector continues to reduce costs. Cisco also posted robust fiscal second-quarter results but gave a soft guidance.

[PRO] Berkshire Hathaway’s secret bets
Warren Buffett’s Berkshire Hathaway once again asked regulators to keep its new stock buys a secret. The Omaha-based conglomerate also reduced its huge stake in tech giant Apple in the fourth quarter, according to a new regulatory filing.

The bottom line

Wall Street returned to some level of calm after markets nosedived a day earlier over inflation jitters.  

But that issue continued to remain front and center.

Fed Vice Chair for Supervision Michael Barr on Wednesday, noted that the central bank remains confident on hitting its inflation target.

But January’s report “on consumer product index inflation is a reminder that the path back to 2 percent inflation may be a bumpy one,” he said.

Investors are getting skittish on whether the Federal Reserve can bring down inflation without derailing an economy that keeps surprising to the upside.

Barr highlighted he agreed with the “careful approach” to cutting rates advocated by Chair Jerome Powell.

“We need to see continued good data before we can begin the process of reducing the federal funds rate.”

Chicago Fed President Austan Goolsbee, who also spoke Wednesday, echoed a similar sentiment, that even if inflation comes in a bit higher for a few months, “it would still be consistent with our path back to target.”

But he pushed backed against market reaction to the latest inflation data.

“Let’s not get amped up on one month of CPI that was higher than it was expected to be,” Goolsbee added.

If he is right, then the investors have nothing to worry about.  

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