The Fed meeting, Starbucks earnings, Amazon layoffs and more in Morning Squawk

Happy Wednesday. When you work in journalism, there’s a new surprising story each day. Yesterday, it was about what gold investors can learn from King Henry VIII’s reign.

S&P 500 futures are rising this morning after a winning day.

Here are five key things investors need to know to start the trading day:

It’s Fed Day. That means we’re counting down the hours until the Federal Reserve announces its interest rate policy decision at 2 p.m. ET, followed by Chair Jerome Powell’s closely watched press conference at 2:30 p.m. ET.

Here’s what to know:

• The market isn’t expecting much excitement: Fed funds futures traders are pricing in a roughly 97% likelihood that the central bank will hold rates steady today, according to CME’s FedWatch.
• Similarly, most respondents to CNBC’s Fed survey see only two quarter-point rate decreases coming this year.
• Despite the recent trend of disagreements at the central bank, CNBC’s Jeff Cox reports that the Fed is likely to take a patience approach to monetary policy in the near-term.
• Even if interest rates will all-but-certainly remaining unchanged, the Fed’s meeting still comes with its own fair share of intrigue. President Donald Trump’s pick to succeed Powell — who earlier this month said he was under criminal investigation — could be announced as soon as this week.
• Prediction markets currently see BlackRock fixed income chief Rick Rieder as the frontrunner for the Fed’s next chairman, with former Governor Kevin Warsh coming in second.
• Traders are heading into the decision with momentum after the S&P 500 recorded new intraday and closing highs yesterday. The Dow Jones Industrial Average was dragged down by UnitedHealth’s nearly 20% plunge.
• Follow market live updates here.

Starbucks shares surged more than 7% this morning after the coffee chain posted stronger-than-expected revenue for the first fiscal quarter and reported traffic growth for the first time in two years. The company missed analysts’ earnings estimates.

In a statement, CEO Brian Niccol said the results are a sign that Starbucks’ business turnaround plan is working. Same-store sales grew for a second straight quarter, helped domestically by demand for its holiday offerings such as specialty menu items and the viral “Bearista” cup.

Later today, all eyes will be on Meta, Microsoft and Tesla when they report earnings after the bell. IBM and ServiceNow will also share their quarterly financial reports this afternoon.

Following federal agents’ killing of two U.S. citizens in Minneapolis this month, House Democrats said yesterday that they will launch impeachment hearings against Homeland Security Secretary Kristi Noem unless Trump fires her.

Democrats are also vowing to oppose funding for the Department of Homeland Security in the wake of the deaths, putting the federal government on the path to a partial shutdown that could start Saturday.

Meanwhile Trump, whose administration has in recent days sought to ease its stance on the killings, said yesterday that “we’re going to de-escalate a little bit” in Minnesota. The president also said he wanted “a very honorable and honest investigation” into the killing of Alex Pretti, who was fatally shot by federal agents over the weekend.

Amazon is cutting about 16,000 corporate jobs, the company announced this morning. The layoffs, which are part of Amazon’s effort to “remove bureaucracy,” mark the online retail giant’s second round of mass cuts since October.

As CNBC’s Annie Palmer reported, some of Amazon’s cloud staffers were notified of “organizational changes” by an email sent in an apparent error yesterday. Amazon did not reply immediately to CNBC’s request for comment on the email.

The layoffs aren’t the only big change for Amazon this week. The company announced yesterday that it will close its Fresh supermarket and Go convenience store chains and convert some locations to Whole Foods stores. Amazon’s grocery chief Jason Buechel told employees in a Tuesday memo that the company needs to make “deliberate choices” to build on its momentum. Read the full memo here.

After more than half of a century, Southwest Airlines has officially ended its open-seating policy.

The airlines cited calls for change from customers when making the decision — which it announced in July 2024 — while playing up the financial benefits to investors. Southwest will now also begin offering roomier, high-priced seats near the front of planes. The change should be a hot topic on the Dallas-based airline’s earnings call tomorrow.

CNBC’s Leslie Josephs flew on Southwest’s last open-seating flight and one of its first with seat assignments this week. Here’s what she saw.

Research and consulting firm Brand Finance found Tesla’s brand suffered last year as CEO Elon Musk ventured further into politics. Here’s how much brand value it lost:

• Loss in dollars: $15.4 billion
• Approximate drop from 2024: 36%

CNBC’s Jeff Cox, Steve Liesman, Sean Conlon, Justin Papp, Dan Mangan, Amelia Lucas, Garrett Downs, Annie Palmer, Leslie Josephs, Erin Black and Lora Kolodny contributed to this report. Josephine Rozzelle edited this edition.