5 Things to Know Before the Stock Market Opens Friday

This is CNBC’s Morning Squawk newsletter.

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

The world’s richest individual is poised for a significant wealth boost.

Tesla shareholders overwhelmingly approved CEO Elon Musk’s compensation plan yesterday, a package valued near $1 trillion. This endorsement, representing 75% of the vote, arrives despite concerns raised by prominent proxy advisory firms. The approved plan grants Musk twelve tranches of shares, contingent upon Tesla achieving specific operational and financial milestones over the next decade. Beyond the financial implications, the agreement strengthens Musk’s control over Tesla by increasing his ownership stake from 13% to 25%, thus amplifying his voting power.

A particularly ambitious milestone embedded within the agreement is the delivery of 1 million Optimus humanoid robots. During a recent address, Musk stated that these robots “will eliminate poverty” and become an industry even “bigger than cell phones, bigger than anything.” However, the Optimus robots are currently unavailable for market consumption, and Musk provided no firm timeline regarding their development and large-scale deployment.

Analysts at Wedbush Securities note that the approval of Musk’s compensation not only motivates him, but also signals to the market the board’s confidence in Tesla’s trajectory, particularly its expansion into robotics and AI. The success hinges, however, on Tesla’s ability to translate technological breakthroughs into commercially viable products and services, navigating the inherent complexities and risks associated with robotics development.

The stock market experienced another downturn yesterday as investors reassessed the lofty valuations of companies heavily invested in artificial intelligence. Key players like Nvidia, Advanced Micro Devices, and Microsoft all closed in negative territory, setting the stage for a potentially losing week across the major indices.

Key takeaways for investors:

• Concerns Regarding Tech Valuations: Following a brief respite on Wednesday, anxieties resurfaced regarding the valuation of tech companies, particularly those deeply involved in AI. The concentration of market gains in a handful of AI-related stocks has prompted concerns about market breadth and potential vulnerability.
• Market Performance: The tech-heavy Nasdaq Composite declined by 1.9% yesterday, while the Dow Jones Industrial Average shed 400 points, underscoring the broad impact of the AI valuation concerns.
• Labor Market Uncertainty: A lack of clarity in the labor market has added to the downward pressure. While the official nonfarm payrolls report was delayed due to the government shutdown, data from Challenger, Gray & Christmas revealed a significant spike in layoffs during October.
• Layoff Surge: The Challenger report indicated 153,074 job cuts last month, representing a 183% increase from September and a 175% rise compared to the previous year. This data paints a less optimistic picture of the labor market’s health.
• Economist Expectations: Prior to the shutdown, economists predicted a decline of 60,000 jobs in October and a rise in the unemployment rate to 4.5%. The actual figures, when released, will be closely watched.

The current market jitters reflect a broader debate on whether current AI valuations accurately mirror the underlying technological and commercial potential. Analysts caution that while the long-term prospects of AI remain promising, short-term volatility is to be expected as the market seeks to discern true value from hype.

President Donald Trump announced agreements with Eli Lilly and Novo Nordisk aimed at substantially reducing the costs of their GLP-1 obesity drugs. Under these landmark deals, Medicare will also begin covering these medications for obesity, commencing mid-2026, expanding access to millions.

The revised out-of-pocket monthly costs for these drugs could vary from $50 to $350, depending upon patient dosage and insurance coverage. This significant reduction contrasts sharply with the current list prices for these medications, which can reach up to $1,350 monthly before insurance application.

This negotiation could reshape the pharmaceutical landscape, as increased accessibility of cheaper drugs affect market competition, and affordability.

David Sacks, Trump’s advisor on AI and cryptocurrency matters, clarified yesterday that there will be “no federal bailout for AI.” This statement followed comments made earlier in the week by OpenAI CFO Sarah Friar, suggesting the company was exploring a government “backstop” or “guarantee” to support its expansive investment plans.

Friar subsequently walked back her original statement, explaining via LinkedIn that her use of the word “backstop” had been misleading. Further clarified that what she meant was for the American strength in technology will come from building real industrial capacity which requires the private sector and government playing their part.”

Meanwhile, OpenAI CEO Sam Altman projects that the company will generate over $20 billion in annualized revenue this year, and projects growth by 2030 to potentially over “hundreds of billions.” The company has recently signed infrastructure deals worth more than $1.4 trillion. As investors ponder how the startup intends to meet its monumental infrastructure commitments, questions surface regarding their long-term financial sustainability.

Customer complaints regarding the in-store experience have prompted Target to rethink its operational strategy. Traditionally viewed as a leader in big-box retail, Target has faced increasing dissatisfaction related to disorganized stores, long checkout lines, and the pervasive use of locked displays.

In response, Target is overhauling aspects of its supply chain and distribution strategy. Specifically, the company will limit how many stores act as fulfillment centers for online orders. By implementing these changes, Target executives anticipate increased focus from the employees devoted to store operations and increased improvements of the shopping experience.

The implications of this reorganization extend beyond mere customer satisfaction. By streamlining its fulfillment processes and refocusing on in-store experience, Target is signaling its commitment to a holistic retail strategy. The success of this initiative depends on its ability to balance the demands of e-commerce logistics with the enduring value of a welcoming and efficient brick-and-mortar presence.

Here’s what you might have missed this week:

— CNBC’s Lora Kolodny, Pia Singh, Sean Conlon, Liz Napolitano, Annika Kim Constantino, Ashley Capoot and Melissa Repko contributed to this report. Melodie Warner edited this edition.