Market Reaction to Fed Projections and Potential US Government Shutdown

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. Global markets were thrown into turmoil after the Federal Reserve's projection of higher interest rates than previously projected. The move boosted the strength of the dollar. Global central banks insist their monetary policy is independent of the Fed, but such currency moves could have consequences.

Norway's Norges Bank left its rate unchanged at 4.5% and Sweden's Riksbank lowered rates by 25 basis points to 2.5%. The Federal Reserve's decision to raise interest rates and its projections for future rate hikes, which were endorsed by U.S. President-elect Donald Trump, have sent shockwaves through financial markets. Without a deal and legislation passed, a partial shutdown of the U.S. government is set to begin late Friday night. While the decision to raise rates 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. The VIX, 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 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 ba

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