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Key Pre-Market Insights to Prepare for Thursday's Stock Market Opening

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Key News Items to Kickstart Thursday's Trading Day

As investors gear up for another trading day, here are the most important news items to keep in mind:

Stock Market Performance and Rate Hike Concerns

On Wednesday, stocks experienced a decline fueled by concerns that the Federal Reserve may not be finished with interest rate hikes. The Dow Jones Industrial Average dropped nearly 200 points, while the S&P 500 and Nasdaq Composite also saw losses. Additionally, treasury yields surged, with the yield on the 2-year Treasury note surpassing the 5% level. These rate hike concerns were further exacerbated by recent readings indicating unfavorable price movements in the services and manufacturing sectors of the U.S. economy.

Jet Fuel Price Spikes and Airline Expenses

Major airlines have issued warnings about the significant spike in jet fuel prices, which have surged by approximately 30% since early July. This increase in expenses poses challenges for carriers during the busy summer travel season. Questions arise regarding how airlines can pass these costs on to customers, especially considering that fares have fallen compared to last year. Southwest Airlines narrowed its unit revenue outlook for the current quarter, while Alaska Airlines expressed concerns about higher fuel prices impacting its pretax margin. United Airlines maintained its revenue forecast but expects fuel prices to reach as high as $3.05 per gallon for the quarter.

Roku's Cost-Cutting Measures

Streaming software company Roku announced plans to lay off around 10% of its workforce, equating to approximately 360 employees. This move is part of an effort to reduce costs after a period of investment. In addition to layoffs, Roku will consolidate office space, slow down new hiring, and decrease expenses related to external services. The company aims to bring down its year-over-year operating expense growth rate through these measures. This marks the third round of layoffs for Roku within the past year, and while its stock initially rose in early trading on Wednesday, it ended the day with a modest increase.

Increase in Covid Hospitalizations

Across much of the United States, Covid-19 hospitalizations are seeing their first increase this year. Over the past week, new hospitalizations have risen by approximately 16%, signaling an upward trend that began in late July. Prior to this summer surge, hospitalizations and deaths had been declining consistently since January. The recent increase coincides with the return of students to school and the anticipation of updated booster shots becoming available at pharmacies in the coming months. However, it is worth noting that the updated shots from Pfizer, Moderna, and Novavax were designed to target a variant, XBB.1.5, that is no longer dominant.

Streaming Services and the NFL Season

As the NFL regular season kicks off on Thursday night, fans will notice an increasing number of games exclusively available on streaming services. In the past, Paramount Global, Comcast's NBCUniversal, and Disney's ESPN streamed football games on their platforms while simultaneously airing them on traditional TV. However, this season, NBC's Peacock, Disney's ESPN+, and Amazon will exclusively stream some games as these companies aim to strengthen their platforms. Google's YouTube TV will also play a new role after acquiring the media rights for the NFL's "Sunday Ticket." Additionally, a record-breaking 73.5 million Americans have expressed their intention to bet on the NFL this season, according to the American Gaming Association's latest survey. In conclusion, these key news items provide valuable insights for investors as they prepare for Thursday's trading day. Factors such as stock market performance, rate hike concerns, airline expenses, Covid-19 hospitalizations, and changes in streaming services present both challenges and opportunities that can impact various sectors of the market. Staying informed and monitoring these developments will be essential for making informed investment decisions.

Conclusion: The Impact on New Businesses

These key news items present a mixed bag of opportunities and challenges for new businesses.

Market Volatility and New Investment Strategies

The volatility in the stock market, driven by rate hike concerns, could compel new businesses to reassess their investment strategies. As the market adjusts to potential changes in monetary policy, businesses must remain agile and responsive to shifts in investor sentiment.

Rising Operational Costs and Pricing Decisions

The surge in jet fuel prices and its impact on airlines serves as a reminder of the importance of cost management. New businesses, particularly in sectors sensitive to commodity prices, must carefully consider how to balance rising operational costs with competitive pricing.

Workforce Reductions and Cost Management

Roku's cost-cutting measures, including layoffs and office space consolidation, highlight the tough decisions businesses may face in managing expenses. New businesses must strike a balance between growth and cost-efficiency to ensure long-term sustainability.

Healthcare Developments and Business Preparedness

The rise in Covid-19 hospitalizations underscores the ongoing impact of the pandemic on the business landscape. New businesses must remain vigilant and prepared to adapt to evolving public health situations.

Streaming Services and Market Opportunities

The shift towards streaming exclusive NFL games indicates the growing dominance of digital platforms. New businesses in the entertainment and media sector could capitalize on this trend, exploring innovative ways to deliver content and engage audiences. In conclusion, these key news items offer valuable insights for new businesses navigating the dynamic market landscape. By staying informed and adapting to these developments, businesses can better position themselves for success in a rapidly changing environment.
Story First Published at: https://www.cnbc.com/2023/09/07/5-things-to-know-before-the-stock-market-opens-thursday-september-7.html
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