Five Things To Keep In Mind As Wednesday’s Stock Market Opens

Here are the most important pieces of news investors need to know before they start trading:

1. Looking For A Bottom

At one point, it seemed like the U.S. stock markets had gone down as far as they could this year. Stocks have been going up since June. Now that fall is starting, the S&P 500 just hit a new low for 2022 on Tuesday.

There might also be more selling to come. The Fed is sticking to its aggressive plan to fight inflation, and the next round of corporate earnings, even though companies have lowered their expectations, could bring bad news. Stock futures went back and forth Wednesday morning after news from the UK (see below).

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2. Bank Of England Gets Involved

The tax-cutting-heavy economic plan of the new UK government has caused chaos on the market, so the Bank of England is stepping in. The central bank said Wednesday that it would put off its plans to start selling bonds, or gilts in the UK, and instead start a temporary program to buy longer-term debt.

The Bank of England said that there would be a big risk to the UK’s financial stability if the problems in this market kept getting worse or didn’t get fixed. “This would lead to an unwarranted tightening of financing conditions and a decrease in the flow of credit to the real economy.” The pound, which had dropped a lot against the dollar, briefly went up when the news came on.

The yields on gilts are on track for their biggest monthly gain in 65 years. The new government of Prime Minister Liz Truss came up with a plan to cut taxes that investors, government officials, and experts all found confusing. The International Monetary Fund (IMF) even spoke out against the plan.

3. Ian Rolls In

Ian turned into a Category 4 hurricane as it was getting ready to hit the Tampa area on the west coast of Florida. According to the National Hurricane Center, the storm’s centre was about 75 miles west-southwest of Naples, Florida, at 5 a.m. ET on Wednesday. Before going to Florida, Ian turned off the power in Cuba.

As the storm got closer, authorities and businesses took steps to protect themselves. Walt Disney World and Universal Studios Orlando said they would close their parks for at least a couple of days, and Amazon said it would close some of its warehouses in the area. The airports in Tampa and Orlando also stopped working.

4. Pivotal Moment For Ukraine

Referendums in parts of Ukraine that Russia controls have shown that most people want to break away and join Russia. Analysts say it was likely to happen because the elections were set up quickly after Ukraine’s lightning offensive to take back large parts of its territory and because they were rigged.

It’s bad news for Ukraine and the rest of the West because Russian President Vladimir Putin and his government have said they’ll do whatever it takes to protect Russia’s land. “There is a risk that Russia could use these votes and the subsequent annexation of these territories as a reason to launch nuclear strikes,” Yuriy Sak, an advisor to Ukraine’s defense minister, told CNBC.

“We are aware of this risk, and we know that it is real.” There are also worries that the US and Europe won’t be able to get weapons to Ukraine quickly enough. Tuesday, NATO held a special meeting to talk about the issue. One expert told CNBC, “We won’t be able to help the Ukrainians unless we have new production, which takes months to start up.”

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5. GM Hits The Brakes On Return To Office

After years of working from home, more companies are telling their employees to go back to the office. Covid infections are getting less common, and more people have access to treatments and vaccines.

But when General Motors told its corporate workers on Friday that they had to come back to work at least three days a week, it didn’t go over well. So, on Tuesday, the company sent another note to employees to take it back. After all, two and a half years of routine are hard to break.

The memo, which was signed by CEO Mary Barra and other executives, said, “Our plan has always been and still is to work together to design the solution that best balances the needs of the enterprise with the needs of each of you.”