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5 Things to Know Before the Stock Market Opens on Wednesday, January 4th

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Traders on the trading floor of the New York Stock Exchange (NYSE) in New York on Tuesday, January 3, 2023.

Michael Nagle | Bloomberg | Getty Images

Here are the most important news traders need to start their trading day:

1. Holiday hangover

Stocks started the year down after the long holiday. The Dow and S&P closed slightly lower, while the Nasdaq, hit by declines in Litter and tesla shares, fell 0.8%. Fresh economic data from Europe, including a decline in France’s consumer price index, could help cheer investors on Wednesday, as market watchers look for signs that inflation is easing. Investors will also digest the latest job openings, or JOLTS, report on Wednesday morning, ahead of Friday’s big monthly jobs number. Read live market updates here.

2. Apple drops below $2 trillion

Tim Cook walks in the Paddock ahead of the US F1 Grand Prix at Circuit of the Americas on October 23, 2022 in Austin, Texas.

Jared C. Tilton | Getty Images

While Tesla has grabbed headlines for its dramatic stock declines, the generally robust Apple has hit a rough patch. The premium electronics maker is down 27% in 2022, faring worse than the broad S&P 500 index. $2 trillion. Downward pressure appears to come mainly from the impacts of Covid in China weighing on iPhone production, as well as a more general concern about demand for expensive Apple products as consumers grapple with inflation and the possibility of a recession this year.

See more information: Apple and Amazon lost $800 billion in market capitalization in 2022. Here’s how it plays out.

3. Regulators Warn Banks About Crypto

Sam Bankman-Fried Trial Set to Begin Oct.

Federal regulators were already wary of cryptocurrency, but are now warning banks to be extremely careful following the rapid FTX meltdown and sweeping indictment by exchange founder Sam Bankman-Fried. The Federal Reserve, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency issued a joint statement on Tuesday, advising banks that engaging in cryptocurrencies could expose them to “frauds and scams among crypto industry participants” as well as “risk of contagion within the crypto asset sector resulting from interconnections between certain crypto asset players.” The notice came the same day that Bankman-Fried pleaded not guilty to eight federal charges, including fraud and conspiracy. His trial is set to begin October 2.

4. Mortgage demand slides

A ‘For Sale’ sign on a vacant lot near new homes in Dunlap, Illinois.

Daniel Acker | Bloomberg | Getty Images

Interest rates spiked again in late 2022, which weighed on mortgage demand. Overall, mortgage demand dropped 13% last week from the previous two weeks. In the breakdown, home purchase orders were down 12%, while refinance orders, which are more sensitive to changes in rates, were down 16%. During the last two weeks of the year, rates on the popular 30-year mortgage rose from 6.34% to 6.58%. It had been 3.33% at the end of 2021.

5. Three votes, no speaker

US House Minority Leader Kevin McCarthy (R-CA) reacts as representatives vote for Speaker of the House on the first day of the 118th Congress in the US Capitol House on January 3, 2023 in Washington, DC.

Win Mcnamee | Getty Images News | Getty Images

The new Congress went into session on Tuesday, but for the first time in 100 years, the majority party failed to immediately elect a spokesperson. Kevin McCarthy, the Republican leader, failed on three ballots to be elected to office as far-right members of his caucus stood firm against him. Opposition to McCarthy grew throughout the day. His chances are murky at best, especially now that former President Donald Trump has pulled out of endorsing McCarthy as a speaker. The chaos likely portends only more dysfunction over the next couple of years, potentially jeopardizing key legislation such as bills to keep government open. The Chamber is adjourned until noon on Wednesday.

– Samantha Subin of CNBC, Kif Leswing, Hugh Son, Diana Olick and Christina Wilkie contributed to this report.

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