5 Things to Know Before the Stock Market Opens Wednesday

Microsoft offers a gloomy outlook.
Inflation is cooling, but it's sticking around for consumers.
Rupert Murdoch gives up his quest to reunite Fox and News Corp.

Here are the most important news items that investors need to start their trading day:

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1. A lot more earnings to go

Markets have kept their heads above water so far this month, even as economic data point to a potential recession and corporate earnings have been mixed, at best. On the latter point, more than 70 companies listed on the S&P 500 have reported quarterly results this earnings season, with about two thirds of them performing better than expected, according to Refinitiv. So there's a while to go yet, and investors will zoom in especially on the guidance companies offer, as economic concerns grow. On the earnings docket Wednesday: Boeing, AT&T, Tesla, IBM and Levi Strauss. Read live markets updates here.

2. Microsoft's slowdown

Matt Mills Mcknight | Reuters
Microsoft signage is seen at the company's headquarters in Redmond, Washington, January 18, 2023.

Microsoft may have beat the Street on earnings, but the company posted its slowest revenue growth since 2016, and its outlook indicated that bad trends would continue. The tech giant said Tuesday it expects revenue growth to continue to slow down. Microsoft's Windows and Office businesses experienced a dropoff at the end of last year, and more declines are likely coming as the personal computer market shrinks again. New business growth for the company's Azure cloud unit also softened in December, which doesn't bode well for the early part of this year. "In our commercial business we expect business trends that we saw at the end of December to continue into Q3," finance chief Amy Hood said.

3. Why inflation is sticky

Michael M. Santiago | Getty Images News | Getty Images
NEW YORK, NEW YORK - JANUARY 12: Eggs are seen on a shelf at Pioneer Supermarkets on January 12, 2023 in the Flatbush neighborhood of Brooklyn borough in New York City. An outbreak of avian influenza, also known as the bird flu, has driven a shortage of eggs as well as an increase in prices in stores throughout some parts of the country.(Photo by Michael M. Santiago/Getty Images)

Inflation is still high – the consumer price index for December was up 6.5% vs a year earlier – but it's slowing down. That's good news for consumers, but only up to a point. Many companies have raised prices, but just because costs come down, it doesn't mean they're going to lower prices across the board, either, as CNBC's Melissa Repko and Amelia Lucas explain. One reason: Many companies have locked in long-term contracts that set prices months in advance for goods and shipping. Also, companies that were squeezed by higher costs earlier are going to want to see their profit margins improve. "We don't take something that was $1, move it to $1.10 and then a year or two later, move it to $1," Utz Brands CEO Dylan Lissette said previously.

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4. Tesla's impact on car prices

Patrick Pleul | Picture Alliance | Getty Images
New Model Y electric vehicles are parked in the early morning in a parking lot at Terminal 5 of the capital's Berlin-Brandenburg Airport. Due to space constraints on the site from the new plant of the U.S. electric car manufacturer Tesla in Grünheide, are several thousand new electric vehicles in the parking lots at the airport BER.

Tesla sent a tremor through the auto industry recently when it lowered prices on several models in multiple markets. The move came after the electric vehicle leader posted weaker-than-expected deliveries at the end of the year, indicating that CEO Elon Musk is trying to goose demand. It also put new pressure on Tesla's rivals, including Ford and GM, as they contend with higher materials costs while trying to ramp up their own EV output, having set ambitious goals for the next decade. The market for used Teslas is paying a price, too: Over the first 17 days of January, prices of cars from the 2020 model year or later dropped to an average price of $58,657, down from their June peak of $76,626, according to Edmonds. Tesla reports earnings after the bell Wednesday.

5. The empire strikes out

Getty Images
(L to R) Rupert Murdoch, executive chairman of News Corp and chairman of Fox News, and Lachlan Murdoch, co-chairman of 21st Century Fox, walk together as they arrive on the third day of the annual Allen & Company Sun Valley Conference, July 13, 2017 in Sun Valley, Idaho.

Rupert Murdoch on Tuesday scrapped his plan to reunite Fox News owner Fox Corp. and News Corp, the owner of The Wall Street Journal and HarperCollins, after determining "that a combination is not optimal for the shareholders." Murdoch's family has effective control of both companies, which constitute a broad but fading empire of media interests. In October, Fox and News Corp formed a special committee to explore a possible deal, which would have re-merged the companies about 10 years after they were split up. Some big non-Murdoch shareholders pushed back, however, signalling that this would not be an easy move for the media mogul and his son Lachlan Murdoch, a top executive at both companies. Meanwhile, News Corp is in advanced talks to sell Move Inc., the owner of realtor.com, to CoStar Group.