Jefferies earnings, Micron, Paychex: 3 things to watch

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Congress has until Saturday evening to agree on at least a temporary funding extension to keep the government running or a shutdown could come as early as Sunday. Lawmakers from both sides of the aisle have said they don’t want a shutdown, but some conservative House members are resisting attempts at passing a stopgap measure and have asked for spending cuts that are bigger than what Republicans agreed to in a deal with the White House earlier this year.

While Washington’s brinkmanship goes on this week, investors are also thinking about the Federal Reserve’s message that interest rates would have to stay higher for longer to battle inflation. The Fed signaled another rate hike was in the cards and officials see two rate cuts next year, half the number they forecast in June. The central bank is determined to get the annual rate of inflation back to its 2% target.

The Fed’s efforts could be complicated by a government shutdown, which Moody’s (NYSE:MCO) Investors Service said would be a negative for U.S. credit, though it sees any shutdown as short-lived. But other factors are also at play, including rising energy prices, an ongoing strike by United Auto Workers, and the resumption of federal student loan repayments next month, which could eat into household discretionary spending.

Despite the Fed’s message on rates, futures traders are putting the probability of another pause on rates at about 83% when the Fed meets in November.

Here are three things that could affect markets tomorrow:

1. Jefferies earnings

The investment bank Jefferies Financial Group Inc (NYSE:JEF) is expected to report earnings per share of 32 cents on revenue of 1.24 billion. The investment bank reports earlier than other Wall Street firms and is often viewed as a glimpse at what is to come for the rest of the big banks.

2. Micron reports

Micron Technology Inc (NASDAQ:MU) is expected to report a loss per share of $1.15 on revenue of $3.9 billion.

3. Paychex earnings

The payroll and benefits platform Paychex Inc (NASDAQ:PAYX) is expected to report earnings per share of $1.12 on revenue of $1.28 billion.