This report is from today's CNBC Daily Open, our new, 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.

After weeks of defying the Federal Reserve, U.S. markets realized that interest rate hikes are probably here to stay.

What you need to know today

• Federal Reserve Governor Christopher Waller stressed that interest rates will likely keep climbing. "Interest rates [might be] higher for longer than some are currently expecting," he said Wednesday.

• U.S. stocks tumbled, with the Nasdaq falling 1.68%, the most of the three big indexes. Asia-Pacific shares traded mixed on Wednesday: the Nikkei 225 fell 0.29% while the Kospi rose 1.3%.

• Google's parent Alphabet demonstrated in a livestreamed event what its new AI chatbot Bard can do. But investors weren't impressed. Alphabet shares slid during the event and were down more than 7% at close.

• Disney's fiscal first-quarter earnings and revenue beat analysts' expectations. Investors liked what they heard. The company also lost around 600,000 fewer subscribers than it had previously forecast. And it's planning to cut 7,000 jobs, or 3% of its workforce.

•  PRO Microsoft may have launched its AI-powered search before Google did. But "they will need a crowbar to pry away advertisers from Google," an analyst from Jefferies said.

The bottom line

U.S markets finally got the Fed's message.

Two officials on Wednesday essentially echoed Fed Chair Jerome Powell's hawkish speech on Tuesday. The Fed's Waller warned that the fight against inflation might be a drawn-out process, "with interest rates higher for longer than some are currently expecting." Likewise, New York Fed President John Williams said that monetary policy could turn even tighter than the central bank had anticipated.

Investors paid attention. The Nasdaq Composite fell 1.68%. The S&P 500 slid 1.11%, and the Dow Jones Industrial Average slipped 0.61%. Markets were also battered by a disappointing earnings season: 42 companies in the S&P 500 have issued negative guidance earnings for the first quarter of 2023, according to Refinitiv — a higher proportion than the historical average.

Though unrelated to earnings, Google-parent Alphabet shares tumbled more than 7% Wednesday, after investors were disappointed by the company's demonstration of Bard. They were, perhaps, also concerned after Google released an advertisement for Bard, in which it gave the wrong answer to a prompt about the James Webb Space Telescope. In a wave of downbeat news, investors may indeed need a telescope to find some good news in the near term.

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