- Interest rates are weighing on the stock market.
- The House removed Kevin McCarthy from the speaker’s office.
- Mortgage demand slumps to a level not seen since the 1990s.
Here are the most important news items that investors need to start their trading day:
The stock market is going through a lot right now. All three major indices fell more than 1% on Tuesday, and the Dow is now negative on the year. (The S&P 500 and the Nasdaq are still up double digits, for what it’s worth.) The main culprit? Interest rates, of course. The Federal Reserve may have slowed down its pace of rate increases, but the effects are pervasive. Now, a market that had grown accustomed to low, low rates for a good 20-plus years finds itself having to accept that rates are going to be higher for some time, as CNBC’s Jeff Cox points out. Follow live market updates.
UNITED STATES – OCTOBER 3: Speaker of the House Kevin McCarthy, R-Calif., arrives to a meeting of the House Republican Conference in the U.S. Capitol on Tuesday, October 3, 2023. Rep. Matt Gaetz, R-Fla., filed a motion to vacate against McCarthy on Monday. (Tom Williams/CQ-Roll Call, Inc via Getty Images)
Tom Williams | Cq-roll Call, Inc. | Getty Images
The situation in Washington isn’t helping, either. If markets want certainty from Congress, good luck. The House booted California Republican Kevin McCarthy from the speaker’s office Tuesday, the first time that’s happened in American history. Eight Republicans and all Democrats voted in favor of the so-called motion to vacate, after far-right GOP Rep. Matt Gaetz of Florida pushed for the vote. Of course, it was McCarthy himself who agreed to allow just one member of the House to file such a motion as part of the deal with his hard-right antagonists that made him speaker nine months ago. What’s next? For now, Rep. Patrick McHenry, a McCarthy ally, is the interim speaker, but the House is effectively paralyzed without an actual speaker. And the government faces another shutdown deadline in just over a month.
Intel CEO Pat Gelsinger, with U.S. President Joe Biden (not pictured), announces the tech firm’s plan to build a $20 billion plant in Ohio, from the South Court Auditorium on the White House campus in Washington, January 21, 2022.
Jonathan Ernst | Reuters
Intel is looking to spin off its programmable chip business with an initial public offering some time in the next three years. The company, which also recently spun off its Mobileye self-driving business, could seek private investment in any such move, but it also intends to hold on to a majority stake. The move comes as Intel seeks to control costs while banking on the strong demand for programmable chips, or field programmable gate arrays (FPGAs). These chips are known for being more flexible and power-efficient than traditional processors. Intel said in July that the unit had registered three straight record quarters, but the company didn’t break out specific sales for it.
United Auto Workers (UAW) members and supporters on a picket line outside the General Motors Co. Flint Processing Center in Swartz Creek, Michigan, US, on Monday, Sept. 25, 2023.
Emily Elconin | Bloomberg | Getty Images
The United Auto Workers’ strikes aren’t hitting General Motors’ sales just yet. The Detroit automaker posted a 21.4% year-over-year jump for the third quarter, outpacing foreign rivals Toyota, Hyundai and Kia. Stellantis, which is also negotiating with the UAW, posted a slight decline, although that isn’t attributable to the strikes, just reflective of recent trends for the company. Ford is expected to post its sales figures Wednesday. About 17% of UAW workers at Ford, GM and Stellantis are on strike, although the union could expand the strikes further as negotiations drag on.
A “For Sale” sign is displayed in front of a new home in a housing development as a maintenance worker sweeps the street in Fairfax, Virginia, on August 22, 2023.
Andrew Caballero-Reynolds | AFP | Getty Images
Bringing it back to interest rates: Mortgage demand hit the lowest point since 1996, according to the Mortgage Bankers Association. That’s a direct result of rates shooting higher, compounding an already tough affordability problem for would-be buyers and sellers. Indeed, the rate on the popular 30-year fixed-rate mortgage is headed toward 8%. Homeowners who are locked into low rates on their mortgages are reluctant to sell since they don’t want to then buy a new place with a much higher rate. Meanwhile, entry level buyers are hesitant to pay an even higher price for a home, with tight supply already jacking up prices.
– CNBC’s Jeff Cox, Alex Harring, Emma Kinery, Christina Wilkie, Kif Leswing, Michael Wayland and Diana Olick contributed to this report.
— Follow broader market action like a pro on CNBC Pro.
