5 things to know before the stock market opens Wednesday, November 2

U.S. Federal Reserve Board Chairman Jerome Powell holds a news conference after Federal Reserve raised its target interest rate by three-quarters of a percentage point in Washington, September 21, 2022.

Kevin Lamarque | Reuters

Here are the most important news items that investors need to start their trading day:

1. It’s Fed day

The Federal Reserve is expected to wrap up its two-day meeting Wednesday afternoon with another three-quarter-point rate hike. Investors will be locked in to hear what the Fed and Chairman Jerome Powell will say about their next course of action with the job market and the economy still running hot. “We think they do open the door to a step down in rate hikes beginning in December,” said Michael Gapen, Bank of America’s chief U.S. economist. Other market watchers, however, expect Powell will avoid trying to create too much excitement for a slowdown in rate hikes. Read live market updates here.

2. Amazon’s slump

An Amazon Prime truck is pictured as it crosses the George Washington Bridge on Interstate Route 95 during Amazon’s two-day “Prime Early Access Sale” shopping event for Amazon members in New York, October 11, 2022.

Mike Segar | Reuters

Just about all of Amazon‘s pandemic gains are gone. The e-commerce and cloud computing giant suffered its fifth straight losing day in markets Tuesday, falling to its lowest point since April 2020. It also fell below $1 trillion in market value. The stock is down nearly 42% so far this year, as the tech titan tries to come to grips with the fact that consumers aren’t spending as much money on stuff as they did during the earlier days of the pandemic. Instead, people are fighting inflation by focusing more on essentials, such as groceries, while shaking off more than two years of Covid restrictions to eat out, party and travel more. These days, the rush from seeing an Amazon package left at your door just isn’t as exciting as a jaunt to Europe or some burgers and beer with your friends.

3. ‘Dark clouds’ for trade

Shipping company Maersk raised its 2022 profit guidance after exceeding quarterly revenue expectations.

Photo by JOHN THYS/AFP via Getty Images

Shipping giant Maersk on Wednesday warned of gloomy times ahead for global trade, even as it reported record profit stemming from high rates charged by its ocean business. “With the war in Ukraine, an energy crisis in Europe, high inflation, and a looming global recession there are plenty of dark clouds on the horizon,” Søren Skou, the CEO of the Danish company, said in a statement. He said all of that weighs on consumers’ ability to spend, leading to softer demand for shipping services. In turn, the company believes it has seen a peak in earnings from its ocean business and that things are slowing down in the fourth quarter.

4. Russia says grain deal is back on

Russian President Vladimir Putin speaks during his press conference at the Rus Sanatorium , October,31,2022, in Sochi, Russia. Leaders of Russia, Armenia and Azerbaijan gathered at Russia’s Black Sea resort of Sochi for a tripartite meeting. 

Contributor | Getty Images

5. Mortgage demand remains weak

An ‘open house’ flag is displayed outside a single family home on September 22, 2022 in Los Angeles, California.

Allison Dinner | Getty Images

A slight decline in rates last week didn’t spark much new mortgage demand. Indeed, overall demand fell as buyers largely remained on the sidelines with rates hovering above 7% and prices remaining high despite a sudden, recent cooling. Demand for refinance mortgages did grow, albeit slightly, according to the Mortgage Bankers Association, but not enough to move the needle. Homebuilders have already said housing is in a recession, and now they’re warning that rougher times are coming in the new year.

– CNBC’s Patti Domm, Annie Palmer, Elliot Smith, Holly Ellyatt and Diana Olick contributed to this report.

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2022-11-02 04:15:25

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