5 things to know before the stock market opens Wednesday

WED, MAR 22, 2023

MORNING SQUAWK

1. Raise or pause?

Decision day is here. Will the Federal Reserve raise its benchmark rate by another quarter point, as has long been expected, or will it hold off for now as the world catches its breath after two tumultuous weeks in the global banking sector? The smart money appears to be on a rate hike, especially since markets have shown signs of calming down after several extraordinary steps by bankers and regulators alike to shore up confidence in the financial system. Besides, the really interesting stuff, as usual, will come from the Fed's statement laying out next steps – and what Chairman Jerome Powell will say in his press conference Wednesday afternoon. As CNBC's Patti Domm writes, Powell has to show he has a plan to keep up the fight against inflation while calming lingering anxieties about banks.

2. On a roll

It's all about the Fed on Wednesday, for sure, but it's also worth reflecting on what's been two strong, relatively calm days for markets this week. After a strong Monday, in the immediate aftermath of the UBS-Credit Suisse deal, U.S. equities posted robust gains Tuesday. The Dow rose about 1% while the S&P 500 and the Nasdaq each increased by more than 1%. It could be stemming from optimism that the Fed may lay off monetary tightening sooner than later due to the recent banking crisis, so there's a lot riding on what Powell says Wednesday. "Fed tightening cycles typically end with a crisis, and those crises tend to end with policy responses," said Brian Levitt, global market strategist for Invesco. Follow live markets updates.

3. 'Things will go wrong'

Google has opened up testing for Bard, its competitor to Microsoft-supported artificially intelligent chatbot ChatGPT, to users in the U.S. and U.K. What can we expect? Sundar Pichai, the CEO of parent company Alphabet, sees exciting things ahead, even if that means some errors, according to an internal company memo seen by CNBC's Jennifer Elias. "As more people start to use Bard and test its capabilities, they'll surprise us. Things will go wrong," Pichai wrote. "But the user feedback is critical to improving the product and the underlying technology." Before this round of testing, 80,000 of Google's employees contributed to testing Bard within the company. Now, we'll just sit back and hope that AI will be merely a trusted tool – and not something that will end up killing us all.

4. Nike's slow boat to recovery in China

Once again, Nike's quarterly results beat Wall Street's expectations. Big beat on the top line, bigger beat on the bottom. The athletic apparel and shoe maker also cut down on its hefty inventory levels. But Nike missed estimates with in China, the company's third-biggest region. China sales fell 8% to $1.99 billion during the quarter, while the Street was expecting $2.09 billion, while sales in other markets grew by double digits. Still, CEO John Donahoe sees momentum in China. Nike, he said, saw growth "really pick up" in the second month of the quarter after the government ended its so-called zero Covid policy.

5. Indictment watch

Donald Trump, the former reality TV star and casino tycoon who served as the 45th president of the United States and is running for the office again, could soon be charged with crimes related to a hush-money payoff to porn star Stormy Daniels over an alleged sexual tryst 17 years ago. Media reports have said an indictment from the Manhattan District Attorney's Office could come as early as this week. It would mark the first time a former president has been criminally charged, and it would supercharge the 2024 campaign for the White House. With the shadow of the Jan. 6, 2021, pro-Trump Capitol insurrection looming over everything, authorities are preparing for potential unrest as the former president has called on his followers to protest if he's charged. Trump, for his part, is "sad" about the potential indictment, one of his lawyers said.

— CNBC's Mike Calia wrote this newsletter. Patti Domm, Tanaya Macheel, Jennifer Elias, Gabrielle Fonrouge and Dan Mangan contributed.

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