5 things to know before the stock market opens on Wednesday – CNBC | Region & Cash

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, the United States, July 19, 2022.

Brendan McDermid | Reuters

Here is the key news investors need to start their trading day:

1. Stock futures looking up

Shares were poised to open higher on a crucial Wednesday morning. Investors are awaiting what the Fed will say after its two-day meeting (more on that below) and some key gains are on the cards. Boeing reported before the bell, while Ford, Qualcomm and Facebook parent Meta are expected after the market close. This earnings season has been full of inflation warnings and macroeconomic fears, but the reports have been mostly decent. According to FactSet, about 70% of the 150+ S&P 500 companies that have reported earnings to date have beaten Wall Street expectations.

2nd Fed Decision Day

Federal Reserve Chair Jerome Powell reacts as he addresses a hearing of the Senate Committee on Banking, Housing and Urban Affairs on the Semiannual Monetary Policy Report to the Congress on Capitol Hill in Washington, DC, May 22. June 2022 testifies.

Elisabeth Franz | Reuters

The Fed concludes its two-day monetary policy meeting on Wednesday, which culminated in the central bank’s latest rate hike and words from Chair Jerome Powell. So what does that increase look like, a three-quarter point, or is there still a chance of a full percentage point? The market is leaning toward the former, but some observers also expect Powell to be somewhat harsh on the need to boost inflation now, or at least for the next several months, as the economy slows. “Powell is very likely to be asked about the possibility of a recession,” said Michael Feroli, JPMorgan’s chief economist. “We suspect he’ll say it’s a risk, but not a foregone conclusion.”

3. Tech giants miss out, market shrugs

Alphabet and Google CEO Sundar Pichai is interviewed by CNBC’s Deirdre Bosa.

Source: CNBC

Both Alphabet and Microsoft puffed up and down as they reported earnings after the market close on Tuesday. And stocks of both companies… went up. Microsoft has given a decent forecast for the coming year. Despite economic challenges, including a slowdown in the US economy hit by historic price growth and the Fed’s aggressive rate hikes, it has not downgraded its outlook. In Alphabet’s case, it looks like Google’s parent company’s results, while poor, aren’t quite as bad as feared. Investors will get more tech earnings on Wednesday afternoon with Meta and Apple after Thursday’s bell.

4. Housing market blues

Contractors work on the roof of a house under construction in the Stillpointe neighborhood of Sumter, South Carolina on Tuesday, July 6, 2021.

Micah Green | Bloomberg | Getty Images

Fortunes have changed dramatically for US home builders. Sales are slowing down after the market got absolutely hot during the height of the Covid pandemic and builders are starting to get restless and offer more stimulus. “We have to work harder to sell houses. We need to be more flexible,” Pulte CEO Ryan Marshall said on a conference call. Even in the short term, there seems to be no relaxation in sight. Mortgage demand eased again last week, according to the Mortgage Bankers Association. Rates are still high, as are prices, and while more homes have come onto the market, supply remains tight.

5. Price increases and profits at Chipotle

A person wearing a protective mask and gloves exits a Chipotle restaurant in San Francisco, California on April 19, 2021.

David Paul Morris | Bloomberg | Getty Images

“Low-income consumers have definitely scaled back their frequency of purchases,” Chipotle CEO Brian Niccol said on the company’s conference call after the burrito giant released its second-quarter results. “Luckily for Chipotle, most of our customers are consumers with higher household incomes.” Chipotle’s gain beat Wall Street’s expectations in large part because the company hiked prices to stave off inflation. While the increases may have discouraged some customers from enjoying the chain’s offerings, you can see from Niccol’s comment above that the company isn’t too concerned about losing the lower end of the market. In fact, Chipotle plans to raise more prices over the next month.

– CNBC’s Carmen Reinicke, Patti Domm, Jennifer Elias, Jordan Novet, Diana Olick and Amelia Lucas contributed to this report.

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