CNBC Daily Open: Rate cuts need to start before inflation’s 2%

Second-day drop
On Wednesday, the S&P 500 and Nasdaq Composite fell for a second day, but the Dow Jones Industrial Average managed to buck the trend with a slight rise. Likewise, Asia-Pacific markets mostly fell Thursday. Japan's Nikkei 225 lost around 1.1% and South Korea's Kospi index retreated 0.13%.

A jolting number
Job openings in the U.S. fell to 7.67 million in July, 237,000 fewer than June's number, which was revised downwards. It's not only lower than the expected 8.1 million, it's also the lowest level since January 2021. Even though job data look weak, there are still around 1.1 open jobs per available worker.

Ready to lower rates
A 2% inflation reading has been the U.S. Federal Reserve's target,  but it seems the central bank is now turning its attention to the jobs market. Atlanta Federal Reserve President Raphael Bostic – who is known to be hawkish, that is, in favor of higher rates – said he's ready to lower rates even though inflation's still slightly higher than 2%.

Chinese companies' advantage
With the Chinese economy still weak, domestic companies are looking to expand overseas for growth. And thanks to the massive Chinese diaspora around the world, those companies have a "disproportionate opportunity" compared with other Asian ones that expanded earlier, according to Bain and Company.

[PRO]  September's "Conviction List"
Every month, investment bank Goldman Sachs publishes a "Conviction List – Director's Cut" that comprises global stocks the bank thinks will perform well. For September, Goldman added three stocks for the Asia-Pacific and Europe regions – and gave one a 64% potential upside.

Markets are confused. Investors want rate cuts because they are a tailwind for markets. But rate cuts tend to be driven by negative economic data. This leads to a confusing scenario in which "bad news is good news but maybe the bad news is so bad it could just be bad?"

This confusion is because the U.S. Federal Reserve has a dual mandate, which often conflicts with each other: to preserve price stability and maximize employment. Now that inflation seems to be cooling, the Fed's turning its focus to the jobs market.

True, inflation's still higher than the Fed's 2% target. But Atlanta Fed President Raphael Bostic acknowledged the central bank "cannot wait until inflation has actually fallen all the way to 2 percent to begin removing restriction because that would risk labor market disruptions that could inflict unnecessary pain."

Bostic's comments were released around the same time as the disappointing JOLTS survey, giving his comments extra weight. Bostic also acknowledged that "the data and our grassroots feedback describe an economy and labor market losing momentum."

In the face of the JOLTS report and Bostic's comments, traders now think there's a 45% chance a 50-basis-point cut is on the table for the Fed's September meeting, according to CME FedWatch. That percentage was 38% just a week ago,

That hope might have halted more serious losses for major indexes. In fact, markets were mixed, reflecting the confused environment. The S&P slipped 0.16% but the Dow ticked up 0.09%.

And while the Nasdaq lost 0.3%, dragged down by Nvidia's loss of 1.66% (though the chipmaker denied reports that it's received a subpoena), other technology and chip stocks recovered losses from the previous session. For instance, Advanced Micro Devices gained 2.87% and Tesla shot up more than 4%.

If you haven't seen the meme already, Google "kombucha girl," or Brittany Broski. Her expression on trying kombucha for the first time rapidly cycles between disgust and pleasure. That could be the face of markets now.

– CNBC's Jeff Cox, Sarah Min and Samantha Subin contributed to this report.