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Inflation battle may be far from over

Workers assemble printed circuit boards at the Intervala manufacturing facility in Mount Pleasant, Pennsylvania, US, on Tuesday, Jan. 30, 2024. The US Census Bureau is scheduled to release factory orders figures on February 2.

Justin Merriman | Bloomberg | Getty Images

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 surges
Wall Street ended Thursday higher with all the
major averages notching fresh closing highs. The 30-stock Dow closed more than 250 points up, or 0.7%. The benchmark S&P 500 climbed 0.3%, while the Nasdaq Composite inched up 0.2%. Those gains came after the Federal Reserve reiterated expectations for three rate cuts this year. 

Apple sued over monopoly
The U.S. Justice Department and more than a dozen states filed a landmark antitrust lawsuit against Apple, accusing the tech giant of monopolizing the smartphone market. It alleges the iPhone ecosystem drove its “astronomical valuation” at the cost of consumers, developers and rival phone makers. The challenge poses a major risk to Apple’s walled-garden business model.  

Vanguard on Fed cuts
Top U.S. asset manager Vanguard says the Fed won’t likely cut interest rates this year, contrary to the central bank’s forecast. This could have implications for central banks and global markets, said Shaan Raithatha, a senior economist at the firm. Vanguard isn’t the only one raising the possibility of no rate cuts in 2024. Mark Okada, CEO of Sycamore Tree Capital Partners, also previously said there’s a “good chance” the Fed won’t cut rates this year.

Reddit pops in debut
Shares of Reddit popped 48% in its debut on the New York Stock Exchange under the stock ticker “RDDT.” The social media company priced its IPO at $34 a share, at the top range, a day earlier. The strong demand for the offering reflects investor appetite for new tech stocks after an extended dry spell for IPOs. 

[PRO] Bullish on Gold
Gold prices are surging to record highs, especially on Fed rate-cut expectations for this year. Top hedge fund manager David Neuhauser is predicting the price of gold could reach $2,500 by the end of 2025, and $3,000 by 2030. “The USD is weakening therefore commodities should break out and soon be the best asset class given inflation has risen,” he said, picking three stocks for investors to play.  

The bottom line

U.S. business activity appears to show strength amid inflationary pressures.

The latest S&P Global Flash U.S. Composite gauge showed manufacturing expanded by the most since mid-2022 as the index ticked higher by 0.3 point to 52.5 in March.

The reading points to a solid improvement in the health of the sector and marks the third straight month of expansion. A reading above 50 signals expansion while anything below the level indicates contraction.

“The brightest news came from the manufacturing sector, where production is now growing at the fastest rate since May 2022,” said Chris Williamson, chief business economist at S&P Global Market Intelligence. 

“Production gains are linked to improving demand for goods both at home and abroad, driving a further upturn in business confidence in the outlook.”

The services sector fell more than expected, coming in at 51.7 — a decline of 0.6 point from a month ago, but still in expansionary territory.

Price pressures also showed signs of picking up as firms increased their selling prices to the largest extent since April last year.

“Costs have increased on the back of further wage growth and rising fuel prices, pushing overall selling price inflation for goods and services up to its highest for nearly a year,” said Williamson.

“The steep jump in prices from the recent low seen in January hints at unwelcome upward pressure on consumer prices in the coming months.”

This reflects the battle against inflation is far from over.

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