5 things to know before the stock market opens Wednesday, January 17

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

Stocks tumbled Tuesday amid fears that the Federal Reserve could ease monetary policy more slowly than expected. Fed Governor Christopher Waller said in a speech the central bank will look to lower interest rates this year “methodically and carefully,” adding, “I see no reason to move as quickly or cut as rapidly as in the past.” The Dow Jones Industrial Average dropped 0.62% during the first trading session of the shortened week, while the S&P 500 fell 0.37% and the Nasdaq Composite ticked lower 0.19%. Meanwhile, the benchmark 10-year Treasury note yield climbed to 4.064%. Follow live market updates.

A federal judge blocked JetBlue Airways’ proposed $3.8 billion takeover of Spirit Airlines, citing reduced competition from the would-be merger. The combination would have created the fifth-largest airline in the U.S., but the Justice Department sued last year, saying it would raise airfares. “The elimination of Spirit would harm cost-conscious travelers who rely on Spirit’s low fares,” said U.S. District Court Judge William Young in his decision blocking the deal. The judge’s ruling raises fresh questions about Alaska Airlines’ proposed acquisition of Hawaiian Airlines, though those two carriers have a more similar business model than the ultra-budget Spirit and full-service JetBlue. Shares of Spirit were nearly halved on Tuesday after the decision was handed down. The carriers said in a statement they disagree with the ruling and are evaluating their options.

Burger King-parent Restaurant Brands International is buying up the chain’s largest franchisee, Carrols Restaurant Group, for about $1 billion in cash. It marks a shift in strategy for Burger King, which currently has only 175 corporate-owned locations. Carrols operates more than 1,000 Burger King restaurants as well as 60 Popeyes locations. Restaurant Brands has been trying to revive the burger banner after lagging sales. “This will allow us to really focus our attention on accelerating remodels and being thoughtful about how to refranchise this restaurant network into smaller packages,” Restaurant Brands CEO Josh Kobza said of the purchase.

China fell short of fourth-quarter GDP estimates on Wednesday, as the economic powerhouse adopts a “new growth model,” according to one economist. GDP was up 5.2% for the last three months of the year, according to China’s National Bureau of Statistics, below the 5.3% that was expected by a Reuters poll. For the full year, GDP rose 5.2%, well above the 3% growth seen in 2022. “Macro data from 2023 shows China’s economy is going through a transition to a new growth model,” said Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, in a note. “With investment in the property sector falling, the economy is more dependent on the manufacturing sector and service sector … This transition will take time to be accomplished.”

More companies are defaulting on their debt in the face of sustained, high interest rates, according to a new report from S&P Global Ratings. More than 150 companies failed to make required debt payments last year, an increase of 80% over the year before and the highest default rate in seven years, except for the Covid-induced spike in 2020. And this year may be no different: “In 2024, we expect further credit deterioration globally, predominantly at the lower end of the rating scale,” the firm wrote. “We expect financing costs to remain elevated despite the prospect of rate cuts.”

– CNBC’s Hakyung Kim, Pia Singh, Leslie Josephs, Amelia Lucas, Evelyn Cheng and Jeff Cox contributed to this report.

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