Here are the key updates that investors should know before they start trading:
1. Credit Outlook Cut
The major U.S. stock averages have seen two weeks of gains in a row. However, there are factors that might challenge this trend soon. Moody’s recently decided to lower its outlook on U.S. credit to negative after the market closed on Friday.
While the agency maintained the Aaa credit rating for the U.S., it mentioned that risks are present due to fiscal policy and political issues in Washington.
This week, other factors that could impact the markets include the release of the consumer price index on Tuesday, which might influence the Federal Reserve’s decisions on interest rates, and the earnings reports of some of the biggest U.S. retailers.
2. Shutdown Scramble
The House has a new speaker who is facing familiar challenges. If Congress doesn’t pass a funding bill before Saturday, a partial shutdown of the U.S. government will occur. As time is running out, House Speaker Mike Johnson, R-La., is working to persuade some members of his party, particularly those on the far-right advocating for spending cuts, to support a short-term funding plan.
Over the weekend, House Republicans proposed a unique spending plan that would extend funding for certain government parts until Jan. 19 and others until Feb. 2, as reported by NBC. The Democratic-led Senate is likely to reject this proposal and is considering a temporary funding measure to keep the entire government operational until mid-January.
If Congress doesn’t take action, a prolonged shutdown could result in widespread furloughs of federal workers and negatively impact economic growth.
3. Important Week for Retail
Several of the biggest U.S. retailers will share their third-quarter earnings this week, providing insights into consumer spending and the overall economic condition. Top executives from industry leaders such as Walmart, Target, and Home Depot will also discuss how they are performing at the beginning of the crucial holiday season.
According to LSEG, previously known as Refinitiv, more than 90% of S&P 500 companies have reported their third-quarter results, showing a 6.3% increase in earnings compared to the same period last year. However, revenue growth has been slower, at 1.4% year over year. Here are the key reports to keep an eye on this week:
- Tuesday: Home Depot (before the market opens)
- Wednesday: Target, TJX Companies (before the market opens)
- Thursday: Walmart, Macy’s (before the market opens); Gap (after the market closes)
4. Heart Health Hopes
The potential advantages of Novo Nordisk’s Wegovy extend beyond just weight loss. A study that was highly anticipated revealed that weekly injections of the drug decreased the risk of heart attack, stroke, and death from cardiovascular causes by 20%.
The study, the results of which were presented and published on Saturday, focused on approximately 17,500 individuals with obesity and heart disease (without diabetes) to assess the impact of Wegovy. These findings may pave the way for broader insurance coverage for Wegovy and encourage more people to consider using it.
5. Marvel’s Box Office Slowdown
The latest installment in Walt Disney’s highly successful Marvel Cinematic Universe, “The Marvels,” had its least successful domestic box office opening to date. In its first weekend in theaters, it brought in $47 million, marking the lowest opening among all 33 MCU films so far. However, a more robust international debut of $63.3 million helped push the global total to $110.3 million.
While this performance would be considered impressive for most releases, it’s notable in a franchise known for producing some of the highest-grossing movies ever. Disney is now seeking the right approach for the Marvel universe, especially after feedback from fans who felt overwhelmed by the multitude of franchises released in theaters and on the Disney+ streaming service.
Investors face challenges with Moody’s negative credit outlook for the U.S., potential government shutdown, and a pivotal week for retail earnings. Novo Nordisk’s Wegovy shows promise for heart health, while Disney grapples with a subdued box office for “The Marvels,” prompting a reevaluation of their Marvel franchise strategy.