CNBC Daily Open: A key inflation gauge in focus

Prices are displayed in a grocery store on February 01, 2023 in New York City.

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 rallies

U.S. stocks rallied Wednesday as the S&P 500 rose 0.86% to close at a record, while the Dow gained 1.22%. Both indexes snapped three-day losing streaks. The tech heavy Nasdaq Composite added 0.51% with the major averages set to end the first quarter on a strong note.

Yellen on China dumping

U.S. Treasury Secretary Janet Yellen warned that China is dumping its surplus of solar panels and EVs on global markets, distorting market prices. She added Beijing’s actions are likely to hurt U.S. green manufacturing firms. Yellen said she will pressure China on these practices during her upcoming trip to the country.

Xi meets U.S executives

Chinese President Xi Jinping met with U.S. executives as businesses try to navigate tense relations between the countries. American business leaders included Blackstone founder Stephen Schwarzman, Qualcomm President and CEO Cristiano Amon and Bloomberg Chair Mark Carney among others. This signals Beijing’s latest efforts to boost foreign investment in China as relations with the U.S remain fraught.

Baltimore port crisisGlobal ocean carriers are putting U.S. companies on the hook for urgent cargo pickup as a result of the Port of Baltimore bridge collapse. The next few days could prove crucial in diverting trade away from the port, logistics executives told CNBC, after a container ship collided into the Francis Scott Key Bridge early Tuesday.

[PRO] Is it time to hedge?Investors anxious over a market decline should hedge their positions to limit risk in financial assets, according to fund managers. “So I do think it’s time to hedge if you’re in an index or you’re in specific companies that have done extremely well this year or even last year,” said David Neuhauser, the founder and chief investment officer of Livermore Partners.

The bottom line

Wall Street is set to get more insight on the underlying trends of inflation.

The Fed’s favored inflation gauge, the personal consumption expenditures price reading, is due Friday.

Fed governor Chris Waller said Wednesday he will be looking at the PCE data closely.

“Some forecasts are predicting core PCE inflation may be revised up for January and is expected to come in at 0.3 percent for February, which we will learn about on Friday,” he said in a speech.

“Adding this new data to what we saw earlier in the year reinforces my view that there is no rush to cut the policy rate.”

He noted “it is prudent” to hold rates at its current restrictive stance “perhaps for longer than previously thought” to keep inflation down toward the Fed’s 2% target level.

The Fed stayed the course for three rate cuts this year at the last meeting.

Any surprises on the upside on PCE “may well be overlooked by the market after the Fed reiterated their intent to lower rates by 25 basis points three times in 2024,” said economists at S&P Global Market Intelligence in a note. “This was despite higher-than-expected inflation readings of late.”

Investors remain cautiously optimistic of the Fed’s rate-cut forecast, with the timing of the first cut still uncertain.

How markets will react to the latest PCE data, however, won’t be clear until the following week, as Wall Street will be closed for the Good Friday holiday.