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Pre-Market Briefing: Key Factors to Consider Before Wednesday's Stock Market Opening

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Key News for Investors to Start Their Trading Day

The Nasdaq and the S&P 500 continue their longest winning streaks in nearly two years, following Tuesday's positive finish. Similarly, the Dow is experiencing its longest positive streak since July. These gains coincide with a slight easing of Treasury yields from recent highs, as the Federal Reserve maintains its stance on interest rates and recent jobs data suggests some economic softening. Investors are also closely monitoring earnings reports, with notable companies such as Disney, Walmart, and Target still to report as the earnings season winds down. Stay updated with live market updates.

Disney's Earnings Report and Investor Expectations

Disney and its CEO, Bob Iger, are striving for a significant win. After approximately a year since Iger's return, investors eagerly anticipate the payoff from his company restructuring efforts. However, the stock's slight decline compared to broader market gains has left investors unimpressed. This softness has drawn the attention of activist investor Nelson Peltz and his firm, Trian. Peltz and Trian, backed by former Marvel boss Ike Perlmutter's shares, are closely monitoring Wednesday's earnings report before making any moves. CNBC's Alex Sherman reports that if Peltz is dissatisfied with the results, he may launch a proxy fight for board seats. Tune in to CNBC's "Closing Bell: Overtime" at 4:05 p.m. ET for Julia Boorstin's interview with Iger.

Microsoft's Surge in Stock Performance

Microsoft's stock reached an all-time high on Tuesday, driven by optimism surrounding the company's prospects in artificial intelligence (AI). With a $13 billion investment in startup OpenAI, Microsoft has become synonymous with the surge in AI popularity. Wall Street views this partnership as beneficial for Microsoft's Office products and its Azure cloud business. Microsoft CEO Satya Nadella highlighted Azure's ability to assist developers using OpenAI technology in swiftly bringing their products to market. UBS analysts noted that what benefits OpenAI also benefits Azure.

Mortgage Rates and Housing Market Momentum

Recent days have seen a significant decline in mortgage rates, resulting in the first increase in home-loan demand in a month, according to CNBC's Diana Olick. The surge in Treasury yields had previously driven mortgage rates even higher, with the popular 30-year fixed rate surpassing 8% at one point. However, yields have since decreased as the Federal Reserve refrained from another benchmark rate hike, coupled with softer-than-expected jobs data for October. The housing market's ability to generate momentum remains uncertain, given high prices and limited supply.

Implications of Tuesday's Election Results

Although an off-year election primarily focused on state races, Tuesday's results provide insights into what may unfold next year when President Joe Biden is expected to stand for reelection. Despite Biden's low poll numbers and growing calls for him to step aside, strong Democratic showings offer some positive news for the president. Democratic Governor Andy Beshear of Kentucky secured reelection in a traditionally Republican state, defeating a candidate endorsed by likely Biden rival Donald Trump. Additionally, Ohio voters enshrined the right to an abortion, while in Virginia, Democrats gained control of both statehouse chambers, dealing a blow to Republican Governor Glenn Youngkin, who has been touted as a potential GOP presidential candidate. — Contributions to this report by CNBC's Lisa Kailai Han, Alex Sherman, Jordan Novet, Diana Olick, and Spencer Kimball. Stay informed about broader market action with CNBC Pro.

Investment Climate and New Business Formation

The current investment climate, characterized by the Nasdaq, S&P 500, and the Dow's impressive winning streaks, presents a favorable environment for new business formation. The Federal Reserve's decision to hold steady on interest rates and the slight easing of Treasury yields could potentially lower borrowing costs for startups, thereby facilitating their growth and expansion.

Lessons from Disney's Corporate Restructuring

The case of Disney and its CEO, Bob Iger, offers valuable insights for new businesses. Despite Iger's restructuring efforts, the company's stock has seen a slight decline, leading to investor dissatisfaction. This situation underscores the importance of strategic planning and effective communication with stakeholders during significant corporate changes.

Impact of AI on Business Performance

Microsoft's all-time high stock performance, driven by its investment in AI startup OpenAI, highlights the growing importance of technological innovation in driving business success. New businesses, particularly those in the tech sector, could potentially leverage AI technologies to enhance their product offerings and gain a competitive edge in the market.

Housing Market Dynamics and Real Estate Ventures

The recent decline in mortgage rates and the resulting increase in home-loan demand could potentially impact new businesses in the real estate sector. However, the housing market's high prices and limited supply present challenges that new real estate ventures must navigate to achieve success.

Election Results and Business Policy Environment

Tuesday's election results could potentially impact the policy environment for new businesses. The strong Democratic showings, despite President Biden's low poll numbers, could influence the policy direction during Biden's potential reelection. New businesses should therefore keep a close eye on political developments and their potential implications for the business policy environment.
Story First Published at: https://www.cnbc.com/2023/11/08/5-things-to-know-before-the-stock-market-opens-wednesday-november-8.html
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