CNBC Daily Open: More certainty of increased volatility

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

Fed might force hand of global banks
The U.S. Federal Reserve's Wednesday indication that it's expecting fewer rate cuts in 2025 than previously projected threw markets into turmoil and boosted the strength of the dollar. Global central banks insist their monetary policy is independent of the Fed, but such currency moves could force them to act.

Markets fall but Dow snaps losing streak
On Thursday, the S&P 500 and Nasdaq Composite fell marginally, and the Dow Jones Industrial Average eked out a tiny gain to break its losing streak. The pan-European Stoxx 600 slumped 1.51% in its worst day since Nov. 12. Norway's Norges Bank left its rate unchanged at 4.5% and Sweden's Riksbank lowered rates by 25 basis points to 2.5%.

Partial shutdown of U.S. government?
A House Republican bill to fund the government for three months and suspend the debt ceiling for two years failed to pass on Thursday night. Thirty-eight Republicans joined most Democrats to vote against the deal, which was endorsed by U.S. President-elect Donald Trump. Without a deal and legislation passed, a partial shutdown of the U.S. government is set to begin late Friday night.

Bank of England holds rates
The Bank of England on Thursday left its key interest rate unchanged at 4.75%, as headline inflation in November hit an eight-month high of 2.6%. While that decision was in line with forecasts, the Monetary Policy Committee's votes surprised markets. Three members of the committee voted to reduce rates, two more than a Reuters poll had predicted.

[PRO] Trading the markets amid volatility
The CBOE Volatility Index, commonly known as Wall Street's fear gauge because it measures the relative strength of 30-day price changes, jumped on Thursday after the Fed's meeting, though it has since calmed a bit. Despite those worries, there's opportunity in volatility — here's how to trade the markets in such times.

The bottom line

If we adopt an objective eye, the major U.S. benchmarks didn't change much during Thursday's trading session.

The S&P 500 slipped 0.09% and the Nasdaq Composite declined 0.10%, but the Dow Jones Industrial Average ticked up 0.04%.

But when seen against the context of Wednesday's market rout, the direction of those shifts also gives an indication, however faint, of the narrative animating the markets.

To rephrase the stock market on Thursday in such terms: Stocks mostly continued sliding after the Fed unleashed its projections, but the Dow finally broke its 10-day losing streak.

It's kind of a mixed bag. Should investors continue treading with caution because of the downward trend? Or should they see the Dow's breakthrough as a glimmer of light at the end of the tunnel?

As with all things in the markets, there aren't any clear answers. The only thing that's more certain is that data points, such as today's U.S. personal consumption expenditures price index for November, will sway the markets more forcefully than before.

"Whatever the reaction is going to be, it's probably going to be more severe one way or the other than it would have been prior to seeing the Fed really increase those expectations," said Mike Dickson, head of research and quantitative strategies at Horizon Investments, referring to the Fed's projection that PCE will come in higher than its 2% target.

Indeed, Wall Street's fear gauge spiked 74% to 27.62 on Wednesday, its second-biggest jump in its history. And even though the VIX cooled off by 12.8% on Thursday, it still closed above 20 — a sign of elevated levels of fear in the market.

It's somewhat ironic, but volatility might be the only thing that's more certain now.

— CNBC's Sarah Min, Sean Conlin, Brian Evans and Pia Singh contributed to this report.