CNBC Daily Open: The Fed, concerned over Trump tariffs, might hold rates

Members of the U.S. Federal Reserve’s rate-setting committee unanimously agreed to hold rates steady in January because they were, in part, worried about the impact that U.S. President Donald Trump’s tariffs would have on inflation. As if proving the Fed prescient, Trump announced on Tuesday (more) possible tariffs on targeted sectors.

Apple launched a new low-cost iPhone on Wednesday in a bid to expand its market share. The competitively priced — in relation to its regular models — smartphone might not be as attractive in value if tariffs force Apple, among other U.S. companies, to raise prices.

That said, the stock market was unshaken, with the S&P 500 merrily climbing its way to another record close. Stocks are buoyed by a healthy U.S. economy, and Fed officials are optimistic about the economic outlook, according to minutes from their January meeting, which might also complicate progress towards bringing down inflation.

Fed concerns over tariffs
U.S. Federal Reserve officials agreed they would need to see inflation drop more before lowering interest rates further, according to minutes of their January meeting, released Wednesday. They noted “upside risks to the inflation outlook. In particular, participants cited the possible effects of potential changes in trade and immigration policy,” the minutes stated.

Possible Trump tariffs on autos
On top of tariffs already announced by U.S. President Donald Trump, he suggested on Tuesday that he might impose levies on imports of automobiles, pharmaceuticals and semiconductors. In remarks to reporters, Trump said the duties would be around 25%, could start as early as April 2 and go “substantially higher over a course of a year.” The nations with the biggest auto exports to the U.S. are Mexico, Japan and Canada.

Second straight record for S&P
The S&P 500 ended Wednesday 0.24% higher, notching another record close. The Dow Jones Industrial Average climbed 0.16%, and the Nasdaq Composite ticked up 0.07%. Palantir shares slumped 10% on news that the U.S. Defense Secretary is ordering the Pentagon to slash its budget. Asia-Pacific markets fell Thursday. Japan and South Korea auto stocks, such as Nissan Motor and Hyundai Motor, retreated on the specter of auto tariffs, weighing down the indexes of both countries.

China holds interest rates
The People’s Bank of China on Thursday kept its key interest rates unchanged. The one-year loan prime rate stayed at 3.1% and the five-year LPR at 3.6%, suggesting that Beijing is prioritizing financial stability over economic stimulus. Both numbers were in line with Reuters poll estimates. The former influences corporate loans and most household loans in China, while the latter serves as a benchmark for mortgage rates.

Apple drops new iPhone
Apple announced on Wednesday the iPhone 16e, which is priced at $599, lower than its mainline iPhone models, and will go on sale later this month. It uses Apple’s A18 chips, which are also found in the main iPhone 16 models. This means the iPhone 16e supports Apple Intelligence, making it Apple’s least expensive new phone that can access features like image generation and notification summaries.

[PRO] Shrugging off tariff threat
Despite the uncertainties generated by tariffs — and with each week seemingly a new one announced — stocks have generally climbed since Trump’s inauguration. The S&P even notched two consecutive closing highs Tuesday and Wednesday. This is why investors aren’t shaken by Trump’s tariffs, according to Goldman Sachs’ chief economist.

Microsoft deploys new state of matter in its first quantum computing chip

Microsoft on Wednesday announced Majorana 1, its first quantum computing chip. The tech giant claims that building Majorana 1 required that it create an entirely new state of matter, which it is referring to as a topological state. Microsoft’s quantum chip employs eight topological qubits using indium arsenide, which is a semiconductor, and aluminum, which is a superconductor.

Rather than relying on TSMC or another company for fabrication, Microsoft is manufacturing the components of Majorana 1 itself in the U.S. That’s possible because the work is unfolding at a small scale. Technologists believe quantum computers could one day efficiently solve problems that would be taxing, if not impossible, for classical computers.