Here are the most important news for investors as they start their trading day:
1. Doing well
The Nasdaq and the S&P 500 have been doing really well for almost two years now. They went up again on Tuesday.
The Dow is also doing well, and it’s been a while since it did this good, since July to be exact. These good results are happening because the interest rates set by the Federal Reserve haven’t changed, and recent job data suggests the economy might not be doing as well as before.
Investors are also paying attention to how well companies are doing, especially big ones like Disney, which will report its earnings on Wednesday, and Walmart and Target, which will report next week, as the earnings season is coming to an end.
2. Everyone is Watching Disney
Disney, along with its CEO, Bob Iger, is trying to achieve a victory. Iger has been back in his role for about a year, and investors are eager to know if the changes he’s making to the company will actually lead to success.
Right now, they aren’t too happy with the results. Disney’s stock has gone down a bit this year, while the overall stock market has been doing better. This weaker performance has grabbed the attention of activist investor Nelson Peltz and his company, Trian.
They are waiting to see how Disney’s earnings report on Wednesday turns out before they decide what to do next. Ike Perlmutter, a former Marvel boss who has been critical of Iger for a long time, is also involved in this. Peltz and Trian might take action, such as trying to get seats on Disney’s board, if they don’t like what they see in the earnings report.
3. Microsoft’s Stock Reaches a Record High with AI
On Tuesday, Microsoft’s stock reached its highest value ever, and this is because people are very optimistic about the company’s artificial intelligence (AI) future. Microsoft has put $13 billion into a startup called OpenAI, and their ChatGPT app has become really popular in the world of AI. People on Wall Street think that this partnership is great for Microsoft’s Office products and their Azure cloud business.
In fact, Microsoft’s CEO, Satya Nadella, has been talking about how Azure can help developers who use OpenAI technology get their products to market quickly. UBS analysts mentioned that what’s good for OpenAI is also good for Azure, in their note on Monday.
4. Mortgage Demand Pick Up
It’s a bit straightforward: when interest rates go down, more people want mortgages. That’s what’s been happening recently, as mortgage rates had their biggest drop in over a year. This led to an increase in the number of people applying for home loans for the first time in a month.
Initially, the rise in Treasury yields had pushed mortgage rates higher, with the popular 30-year fixed-rate mortgage going over 8% at one point.
However, yields have come down because the Federal Reserve didn’t increase the benchmark interest rate, and job data for October was weaker than expected. We still need to see if the housing market can gain some momentum, though. Home prices are still high, and there’s not a lot of homes available for sale.
5. Election Day Tea Leaves
This year’s election focused on state races, not the national ones. However, the results on Tuesday could provide insights into what might happen next year when President Joe Biden may run for re-election. Right now, Biden’s approval ratings are not very high, and some people are suggesting that he should step aside. But there were some significant wins for Democrats this week.
For instance, Democratic Governor Andy Beshear of Kentucky, which is typically a Republican-leaning state, won re-election. He defeated a candidate who had the support of likely Biden competitor Donald Trump. In Ohio, voters also decided to protect the right to have an abortion.
In Virginia, the Democrats took control of both chambers of the state’s legislature, which was a setback for Republican Governor Glenn Youngkin, who has been considered a possible Republican presidential candidate.
Summary
As investors kickstart their trading day, the Nasdaq and S&P 500 are performing well, driven by steady Federal Reserve rates and cautious economic signs. Disney’s struggles are under scrutiny as activist investors ponder their next move. Microsoft reaches a stock high due to AI prospects, while lower mortgage rates spur increased demand. Election results offer hints for President Biden’s future as Democrats score wins in various state races.
