5 things to know before the stock market opens Thursday, September 22
Traders on the floor of the New York Stock Exchange, September 14, 2022.
Here are the most important news that investors need to start their trading day:
1. The next morning
Investors were seeking long-term clarification from the Federal Reserve on Wednesday, but were not impressed when the central bank did exactly that. While raising the benchmark interest rate by another three-quarters of a point, the Fed said it would hold until it reached 4.6%. Now, the federal funds rate is 3% to 3.25%, its highest rate in just over 14 years. The announcement sparked a volatile afternoon, as stocks initially fell, then returned to positive territory before ending the day with significant losses. On Thursday morning, all three major indices looked ready for a mixed open.
2. The King of Bonds and the Yield Curve
Jeff Gundlach, CEO of DoubleLine Capital, also known as the bond king, believes that the Fed’s aggressive campaign to cool inflation is too late – and it is pushing the US economy into a potential recession. “The Fed should have done more earlier,” Gundlach told CNBC’s “Closing Bell: Overtime” on Wednesday. “I think the Fed should slow down on these rate increases.” He pointed to the differences in yields between two-year and 10-year Treasuries, also known as the yield curve. Some analysts and market players see the rising yield on short-term debt as a sign of a recession approaching. As of early Thursday, the yield gap has grown wider, with the two-year Treasury yield hovering around 4.1%. “I think the odds of a recession in 2023 are very high. I mean I would put it at 75%,” Gundlash said Wednesday.
3. New Salesforce goal
Marc Benioff, CEO of Salesforce, at the World Economic Forum in Davos, Switzerland on May 25, 2022.
Adam Galica | CNBC
Recent market woes, prompted by the Fed’s push to suppress inflation, have not been particularly kind to tech companies, forcing many of them to tighten their belts a bit. On Wednesday, cloud software company Salesforce, which owns workplace messaging app Slack, revealed its goal to reach an adjusted operating margin of 25% for fiscal year 2026. To achieve this, the company said it will aim to reduce sales and marketing spending relative to revenue. Salesforce already said earlier this year that it will be more careful with how it adds to its headcount, and is valuing its real estate as hybrid business becomes more business-to-normal. The company’s shares hit a 52-week low on Wednesday before pulling back a bit during out-of-hours trading.
4. Troubles in Russia
An activist takes part in an unauthorized protest on Arbat Street on September 21, 2022 in Moscow, Russia. The sign is played on the word ‘mobilize’ as ‘no burial’.
Contributor | Getty Images News | Getty Images
Vladimir Putin’s decision to call up 300,000 reservists for his faltering invasion of Ukraine did not resonate with many people in Russia. More than 1,300 people were arrested in different cities after protests erupted after the Russian president’s announcement. Prices for flights from Russia have also gone up, and social media has been filled with images of people lining up at border crossings. Putin’s latest move came as other world leaders met at the United Nations General Assembly in New York. Western officials, including US President Joe Biden, condemned Putin’s threats. In a hypothetical address to the United Nations, Ukrainian President Volodymyr Zelensky called for the creation of a special court to punish Putin’s government. “Russia has to pay for this war,” Zelensky said.
5. More problems for Trump
New York Attorney General Letitia James speaks during a press conference regarding the financial fraud case of former US President Donald Trump and his family on September 21, 2022 in New York.
Yuki Iwamura | Agence France-Presse | Getty Images
Wednesday was not a great start for Donald Trump, as New York Attorney General Letitia James announced that she would sue the former president, his three oldest children and his company for damages of about $250 million. She said her civil investigation revealed “amazing” fraud, and that she sent a criminal referral to federal investigators. The day ended on an even worse note for Trump, as an appeals court panel — made up of two judges appointed by him and one appointed by former President Barack Obama — decided unanimously to allow federal investigators to resume their review of highly sensitive documents seized from March-a-Lago in a criminal investigation.
Sarah Min, Yoon Lee, Sophie Kidderlin, Jordan Novett, Sam Meredith, Amanda Macias, Kevin Breuninger and CNBC’s Dan Mangan contributed to this report.
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