Traders on the NYSE floor, September. 14, 2022.
Here is the most important news that investors need to start their trading day:
1. The next morning
Investors were looking for long-term clarity from the Federal Reserve on Wednesday, but didn’t like it when the central bank did just that. As it raised its benchmark rate by another three-quarters of a point, the Fed said it would move forward until it hit 4.6%. Now, the federal funds rate is between 3% and 3.25%, the highest in just over 14 years. The announcement triggered a volatile afternoon, where stocks initially fell, then rallied into positive territory before ending the day with big losses. On Thursday morning, the three major indices looked set for a mixed opening.
2. The king of bonds and the yield curve
Jeff Gundlach, CEO of DoubleLine Capital, also known as the king of bonds, believes the Fed’s aggressive campaign to cool inflation is one too, too late and is pushing the US economy into a possible recession. “The Fed should have done more sooner,” Gundlach told CNBC’s “Closing Bell: Overtime” Wednesday. “I think the Fed should slow down on these rate hikes.” He pointed to the differences in yields between 2-year and 10-year Treasuries, also known as the yield curve. Some analysts and market participants see a higher yield on short-term debt as a sign that a recession is on the way. Since the beginning of Thursday, the yield gap has widened further, with the 2-year Treasury yield hovering around 4.1%. “I think the odds of a recession in 2023 are very high. I mean, I’d put them at 75 percent,” Gundlach said Wednesday.
3. The new Salesforce goal
Marc Benioff, CEO of Salesforce, at the WEF in Davos, Switzerland on May 25, 2022.
Adam Galica | CNBC
Recent market woes, driven by the Fed’s drive to curb inflation, have not been particularly kind to tech companies, forcing many of them to tighten their belts a little. On Wednesday, cloud software company Salesforce, which owns the Slack workplace messaging app, presented a goal of achieving an adjusted operating margin of 25% for fiscal year 2026. To get there, the company said that it would aim to reduce the rate of spend on sales and marketing, relative to revenue. Salesforce had already said earlier this year that they would be more careful about how to increase their headcount and is evaluating their real estate assets as hybrid work becomes more of the norm. The company’s stock hit a 52-week low Wednesday before rebounding slightly during overtime trading.
4. Unrest in Russia
An activist participates in an unauthorized protest on Arbat Street on 17 September. 21, 2022 in Moscow, Russia. The sign plays on the word mobilization as “No burial”.
Collaborator | Getty Images News | Getty Images
Vladimir Putin’s decision to recall 300,000 reservists for his vain invasion of Ukraine has not gotten along well with many people in Russia. Over 1,300 people were arrested in various cities after protests broke out following the announcement of the Russian president. Prices for flights departing from Russia also increased and social media was filled with images of people lining up at border crossings. Putin’s latest move came along with other world leaders at the UN General Assembly in New York. Western officials, including US President Joe Biden, have condemned Putin’s threats. In a virtual speech at the UN, Ukrainian President Volodomyr Zelenskyy called for a special court to punish Putin’s government. “Russia should pay for this war,” Zelenskyy said.
5. Other problems for Trump
New York Attorney General Letitia James speaks during a press conference on former US President Donald Trump and his family’s financial fraud case on September 21, 2022 in New York.
Yuki Iwamura | AFP | Getty Images
Wednesday didn’t start out so well for Donald Trump, as New York Attorney General Letitia James announced that he would be suing the former president, his three eldest sons and his company for damages of approximately $ 250 million. She said her civil investigation of her uncovered a “staggering” fraud and that she had sent a criminal report to federal investigators. The day ended on a probably worse note for Trump, as a court of appeals jury – made up of two judges appointed by him and one appointed by former President Barack Obama – unanimously decided to allow federal investigators to resume the review of highly sensitive documents seized in Mar-a-Lago in a criminal investigation.
– Sarah Min, Yun Li, Sophie Kiderlin, Jordan Novet, Sam Meredith, Amanda Macias, Kevin Breuninger, and CNBC’s Dan Mangan contributed to this report.
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