5 Things to Know Before the Stock Market Opens on Wednesday, January 25
People walk past the New York Stock Exchange (NYSE) on Wall Street on July 12, 2022 in New York City.
Angela Weiss | AFP | Getty Images
Here are the most important news investors need to start their trading day:
1. There is still a lot of money ahead
So far this month, markets have kept their heads above water, even as economic data points to a potential recession and corporate earnings have been mixed at best. On the latter point, more than 70 S&P 500 companies reported quarterly results this reporting season, with about two-thirds of them performing better than expected, according to Refinitiv data. So there is still time, and investors will pay special attention to the recommendations offered by companies as economic problems grow. On Wednesday’s earnings call: Boeing, AT&T, Tesla, IBM and Levi Strauss. Read live market updates here.
2. Microsoft slowdown
A Microsoft sign at the company’s headquarters in Redmond, Washington on January 18, 2023.
Matt Mills McKnight | Reuters
Microsoft may have outperformed Street in profits, but the company posted its slowest revenue growth since 2016, and its outlook indicated that bad trends would continue. The tech giant said on Tuesday that it expects revenue growth to continue to slow. The Microsoft Windows and Office divisions experienced a downturn at the end of last year, and further declines are likely to follow as the personal computer market shrinks again. New business growth for the company’s Azure cloud division also slowed in December, which does not bode well earlier this year. “In our commercial business, we expect the business trends we saw at the end of December to continue into the third quarter,” said CFO Amy Hood.
3. Why inflation is sticky
NEW YORK, NEW YORK – JANUARY 12: Eggs on a shelf at Pioneer Supermarkets on January 12, 2023 in the Flatbush neighborhood of the Brooklyn borough of New York City. An outbreak of bird flu, also known as bird flu, has led to shortages of eggs as well as higher prices in stores in parts of the country. (Photo by Michael M. Santiago/Getty Images)
Michael M. Santiago | News Getty Images | Getty Images
Inflation is still high – the consumer price index for December rose by 6.5% compared to last year – but it is slowing down. This is good news for consumers, but only up to a point. Many companies have raised their prices, but just because costs are coming down doesn’t mean they’re also going to cut prices across the board, as CNBC’s Melissa Repko and Amelia Lucas explain. One reason: many companies have entered into long-term contracts in which prices for goods and delivery are set months in advance. In addition, companies that were previously constrained by higher costs will want their profits to increase. “We don’t take something that cost $1, change it to $1.10, and then after a year or two, change it to $1.” Utz Brands CEO Dylan Lisset said earlier.
4. Tesla’s impact on car prices
The new Model Y electric cars are parked early in the morning in the parking lot at Terminal 5 of the capital’s Berlin-Brandenburg Airport. Due to lack of space at the new plant of the American electric vehicle manufacturer Tesla in Grünheide, several thousand new electric vehicles are parked at the BER airport.
Patrick Plus | Photo Alliance | Getty Images
Tesla recently rocked the automotive industry when it cut prices on several models in many markets. The move comes after the EV leader reported weaker-than-expected shipments at the end of the year, indicating that CEO Elon Musk is trying to reduce demand. It also put new pressure on Tesla’s competitors, including Ford and grandmasteras they grapple with higher material costs as they try to ramp up their own production of electric vehicles, setting ambitious targets for the next decade. The used Tesla market is paying the price, too: In the first 17 days of January, prices for 2020 model year or later vehicles dropped to an average price of $58,657 from a June peak of $76,626, Edmonds said. Tesla reports earnings after Wednesday’s call.
5 The Empire Strikes
(left to right) Rupert Murdoch, executive chairman of News Corp and chairman of Fox News, and Lachlan Murdoch, co-chairman of 21st Century Fox, walk together as they arrive on the third day of the annual Allen & Company Sun Valley conference. July 13, 2017 in Sun Valley, Idaho.
Getty Images
— CNBC’s Yoon Lee, Jordan Novet, Melissa Repko, Amelia Lucas, Michael Weiland and Lillian Rizzo contributed to this report.
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