NEW YORK, NEW YORK – OCTOBER 16: Traders and others work on the New York Stock Exchange (NYSE) floor in New York City.
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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
ECB cuts rate, as expected
The European Central Bank on Thursday lowered its key interest rate by 25 basis points to 3.25%, as markets had expected. That’s its third 25-basis-point cut this year, the first time since December 2011 it’s reduced rates at consecutive meetings. The ECB’s Governing Council called the process of disinflation “well on track.”
Dow bucks the trend to rise
U.S. markets had a mixed Thursday. The Dow Jones Industrial Average added 0.37% to close at another record level. But the S&P 500 and Nasdaq Composite were mostly unchanged. Europe’s Stoxx 600 index finished the day 0.83% higher as traders took in the ECB’s rate cut and ECB President Christine Lagarde’s comment that the bank is “not pre-committing to a particular rate path.”
More positive economic data
U.S. retail sales rose a seasonally adjusted 0.4% for September. That’s higher than both the 0.1% gain in August and the 0.3% Dow Jones forecast, according to the advance report. In more positive economic news, initial jobless claims for the week ending Oct. 12 dropped 19,000 from the week before to 241,000. Those reports reinforce the maxim: Don’t bet against the American consumer.
Handy earnings beats
Netflix’s third-quarter earnings and revenue beat LSEG estimations, the company reported Thursday. The company added 5.1 million subscribers during the quarter ended Sept. 30, 600,000 more than the StreetAccount estimate. Meanwhile, Taiwan Semiconductor Manufacturing Co’s reported its third-quarter net revenue jumped 36% year on year, and revised its fourth-quarter revenue upward.
[PRO] Soaring small caps
Unlike big companies, small companies don’t have the heft to negotiate for low-rate loans, for instance, or the cash moat to withstand fluctuations in consumer habits. Hence, as the U.S. Federal Reserve cuts interest rates, small-cap stocks tend to benefit more. And they have just hit a high not seen in three years.