Trader on the floor of the NYSE, Oct. 25, 2022.

Source: NYSE

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

1. Time to call IT

2. Cloudy outlook from Microsoft

Satya Nadella, CEO of Microsoft

Source: Microsoft

Microsoft beat on the top and bottom lines when it reported quarterly results Tuesday, but weak cloud revenue and underwhelming guidance weighed on the tech giant’s shares in off-hours trading. Wall Street had expected the pace of public cloud business Azure’s revenue growth to slow in the quarter, but it came in lower than projections, and not just because consumption growth moderated. Chief Financial Officer Amy Hood said energy costs weighed on Azure’s gross margin, another example of how inflation is taking a toll on pretty much everything.

3. Google’s ad problem

Loup's Gene Munster breaks down Alphabet earnings

Alphabet, the other tech behemoth to report earnings Tuesday, didn’t fare much better with investors as it confirmed broader fears about the online ad market. The Google parent said YouTube’s advertising revenue fell about 2% year over year, while Wall Street was expecting a 3% increase. While overall ad revenue for Alphabet rose slightly in the quarter, the company saw lower spending in search advertisements for categories such as mortgages, which is suffering from declining demand due to rising rates (see below), and cryptocurrency, which has experienced a sharp downturn this year along with other markets.

4. Mortgage demand withers

A house’s real estate for sale sign is seen in front of a home in Arlington, Virginia, November 19, 2020.

Saul Loeb | AFP | Getty Images

Demand for mortgages has fallen to the lowest level in 25 years thanks in large part to surging interest rates, according to the Mortgage Bankers Association. The rate for the most popular mortgage, the 30-year fixed, is hovering above 7% after starting the year around 3%. The rapid turnaround, which came after years of low rates and easy money from the Federal Reserve, cooled what had become a super-hot market in the first two years of the Covid pandemic, as Americans scooped up homes in the suburbs and exurbs. While prices are still higher than where they were a year ago, the pace of increases has cooled off dramatically as rates scare off sellers, buyers and builders alike.

5. ‘The heaviest of battles’

Civilians evacuated from the Russian-controlled city of Kherson arrive by ferry in the town of Oleshky, Kherson region, Russian-controlled Ukraine October 22, 2022.

Alexander Ermochenko | Reuters

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