Market Beats | US Airlines Cancel Flights as Government Shutdown Disrupts Air Travel; US Consumer Sentiment Drops to Lowest Since 2022; Elon Musk Pitches Wild Tesla Future After $1 Trillion Pay Approval; Microsoft Heads for Longest Losing Streak in Over a Decade; Sweetgreen Slashes Outlook as Young Diners Cut Spending and Sales Slide; Senate Republicans Reject Scaled-Back Democratic Offer; Group of 20 Banks Offers $18 Billion Loan to Fund Oracle AI Data Center Project

—— US Airlines Cancel Flights as Government Shutdown Disrupts Air Travel; US Consumer Sentiment Drops to Lowest Since 2022; Elon Musk Pitches Wild Tesla Future After $1 Trillion Pay Approval; Microsoft Heads for Longest Losing Streak in Over a Decade; Sweetgreen Slashes Outlook as Young Diners Cut Spending and Sales Slide; Senate Republicans Reject Scaled-Back Democratic Offer; Group of 20 Banks Offers $18 Billion Loan to Fund Oracle AI Data Center Project

1. US Airlines Cancel Flights as Government Shutdown Disrupts Air Travel

Airlines across the US began canceling flights scheduled for the coming days as the longest government shutdown in history snarls air travel and forces thousands of passengers to change their plans.

With hundreds of flights already suspended by the nation’s four largest carriers, the world’s busiest aviation market has become a flashpoint in the ongoing standoff between Republicans and Democrats over federal funding, as President Donald Trump ramps up pressure to reach a deal.

The Republican-led administration said the reductions are needed to maintain safety amid staffing shortages caused by the shutdown. At least one senior Democrat has called for more transparency to ensure the move isn’t politically motivated.

Of the 25,375 flights scheduled for Friday, fewer than 3% have been canceled, according to Cirium data. United Airlines Holdings Inc. — which is cutting 510 flights through Sunday — and American Airlines Group Inc. are the most affected, with the highest cancellations on intrastate routes in Colorado and Texas.

“Right now it’s probably more akin to a snowstorm or stretch of bad weather than a catastrophic breakdown,” TD Cowen analyst Tom Fitzgerald said in a Bloomberg Television interview. “The swing factor will depend on how long this lasts. All the major airlines are going to feel this.”

Airlines are experienced in navigating disruptions from storms or outages and are expected to minimize the impact by cutting capacity on their least-occupied routes. United said its reductions are focused on regional and domestic mainline flights not connecting major hubs.

The cuts don’t apply to international flights. However, the FAA order bans commercial space launches and reentries during certain hours starting Monday, and it allows facilities to opt out of providing some air traffic control services if staffing is insufficient.

The US Transportation Department and Federal Aviation Administration announced Wednesday that airlines must reduce flight capacity by 10% across 40 major airports to relieve pressure on the system. The plan was unveiled by Transportation Secretary Sean Duffy and FAA Administrator Bryan Bedford.

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2. US Consumer Sentiment Drops to Lowest Since 2022

US consumer sentiment fell to a more than three-year low as the government shutdown clouded the economic outlook and high prices worsened views on personal finances.

The University of Michigan’s preliminary November sentiment index dropped to 50.3 — the lowest since June 2022 — from 53.6 in the prior month, according to data released Friday. The reading was weaker than all but one estimate in a Bloomberg survey of economists.

A gauge of current economic conditions plunged 6.3 points to a record low of 52.3 as anxiety rose over the impact of the government shutdown. The decline in overall sentiment was broad across age, income, and political groups. Among Democrats and independents, confidence fell to the lowest on record going back to 1984.

While mentions of high prices increased for the fifth straight month, long-term inflation expectations eased. Consumers expect prices to rise at an annual rate of 3.6% over the next five to ten years — a three-month low — while one-year expectations edged higher.

“Consumers perceive pressure on their personal finances from multiple directions,” said Joanne Hsu, director of the survey, in a statement. “They also anticipate that labor markets will continue to weaken and expect to be personally affected.”

A measure of personal finances fell to a six-year low, while buying conditions for big-ticket items were deemed the worst since mid-2022.

Unemployment fears surged this month, with 71% of respondents expecting joblessness to rise over the next year — more than double the share from a year ago.

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3. Elon Musk Pitches Wild Tesla Future After $1 Trillion Pay Approval

Elon Musk responded enthusiastically to Tesla Inc. investors approving his $1 trillion compensation package, making a series of bold predictions about the company’s future.

The CEO said Thursday that Tesla’s humanoid robot, Optimus, will evolve from simple tasks — like handing out candy — to performing surgery with “beyond human” precision. He added that Tesla’s car business, headed for a second straight year of declining sales, aims to ramp up production roughly 50% by the end of 2026. Musk, who also leads SpaceX, went further to predict that Tesla’s robots and vehicles will “play a big role” in building bases on the moon and Mars. “It’ll be something cool — next-level moon buggy or Mars buggy,” he told a shareholder.

At 54, Musk will need to realize at least some of these lofty ambitions to meet the operational and market-value milestones tied to the pay deal passed during Tesla’s annual meeting. More than 75% of votes were cast in favor, General Counsel Brandon Ehrhart said, prompting a standing ovation from shareholders gathered at the company’s Austin factory.

The stock award paves the way for Musk — already the world’s richest person — to potentially become the first-ever trillionaire and expand his Tesla stake to 25% or more over the next decade.

“It’s not just a new chapter for Tesla, it’s a new book,” Musk said. “And that new book is massively increasing vehicle production and ramping up Optimus production faster than anything’s ever been ramped up before in human history.”

The vote was pivotal, as Musk had hinted he might step down or focus more on his other ventures if he didn’t secure greater control of the automaker. Tesla shares fell as much as 4.8% in early New York trading Friday amid a broader market selloff. The stock was up 10% this year through Thursday, lagging the S&P 500’s 14% advance.

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4. Microsoft Heads for Longest Losing Streak in Over a Decade

Microsoft Corp. is on track for its longest stretch of daily losses in more than a decade as growing skepticism toward the artificial intelligence trade continues to weigh on big tech.

Shares fell as much as 0.8% on Friday, and if they end the session lower, it would mark the company’s longest losing streak since a nine-day slide that ended in November 2011. The stock has dropped 8.6% over the past eight sessions, wiping out nearly $350 billion in market value. Microsoft hasn’t had a positive day since releasing its quarterly results in late October.

While the report contained several positives — including stronger-than-expected growth in its Azure cloud business — Wall Street has grown increasingly wary of the enormous capital outlays companies are making to build out AI infrastructure. Microsoft spent $34.9 billion on capital expenditures last quarter and said spending will rise again in the current period.

The decline highlights a broader pullback in AI-driven stocks that have fueled the market rally this year. The Nasdaq 100 Index and the Bloomberg Magnificent 7 Total Return Index are both down about 4% this week, heading for their biggest one-week percentage drop since April.

Apple Inc. stood out as a rare bright spot. The company, which has been less aggressive in its AI investments, rose as much as 0.9% Friday, becoming a haven amid the AI selloff.

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5. Sweetgreen Slashes Outlook as Young Diners Cut Spending and Sales Slide

Sweetgreen Inc. cut its full-year outlook after third-quarter results deteriorated more than expected, with the salad chain citing persistently weak demand.

The company now projects revenue between $682 million and $688 million, below its prior range, and lowered guidance for same-store sales.

Same-store sales fell 9.5% in the third quarter, a steeper decline than analysts’ forecast of 6.3%. The drop was driven by lower foot traffic and more consumers opting for cheaper meals, Sweetgreen said. Price hikes provided only a slight benefit. Chief Financial Officer Jamie McConnell said on the earnings call that October sales are “running at low negative double digits right now.” Diners aged 25 to 35 — about 30% of Sweetgreen’s customer base — have cut spending by 15%, she added.

Shares plunged as much as 17% Friday. The stock is down 81% this year through Thursday’s close.

“The recipe of how to bolster trends continues to center on improved operations and accelerated menu innovation, although neither has yet manifested in better results,” wrote William Blair analyst Sharon Zackfia.

Fast-casual chains have been under pressure as diners scale back spending. Chipotle Mexican Grill Inc. and Cava Group Inc. both flagged weakness among younger consumers and trimmed forecasts after disappointing sales.

Sweetgreen’s slump has been deeper than peers’, marking its third straight quarter of same-store sales contraction — the sharpest decline yet. The company also posted its largest per-share loss since 2022. Facing higher costs, Sweetgreen scaled back its expansion plans to 37 net new stores this year, down from at least 40 previously.

“We’re prioritizing the strength of our financial position by improving cash flow and maintaining greater discipline in how we invest, which will include a slowdown of new restaurant openings,” Chief Executive Officer Jonathan Neman said.

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6. Senate Republicans Reject Scaled-Back Democratic Offer

Senate Republicans on Friday rejected Democrats’ offer to scale back their shutdown demands to a one-year extension of expiring Affordable Care Act subsidies, prolonging a political impasse that has disrupted air travel and delayed food aid.

The ACA subsidies have been at the center of debate during the 38-day government shutdown — the longest in US history. A senior Senate Republican aide dismissed the latest Democratic proposal as “dead on arrival.”

Senate Majority Leader Chuck Schumer called the plan a “simple compromise” that could pass “within a few hours.” But Senator Steve Daines, a Montana Republican with close ties to GOP leadership, said on Fox News: “No, we’re not going to do that. We’ve said, open up the government.”

A White House official, speaking on condition of anonymity, said Schumer’s offer signaled Democrats were feeling pressure to strike a deal. The official reiterated that Republicans would discuss healthcare tax credits only after the government reopens.

Food assistance has been halted for 42 million Americans. A federal judge on Thursday ordered the Trump administration to release funds for the program, but the White House has appealed the ruling.

Democrats initially demanded $1.5 trillion in spending be attached to the package, including a $350 billion permanent extension of ACA tax credits and a repeal of new Medicaid work requirements passed by Republicans this year.

Later Friday, the Senate is set to hold a procedural vote on a bill that would pay federal workers who have gone without wages during the shutdown.

Senate Majority Leader John Thune has threatened weekend votes on a stopgap measure to keep lawmakers in Washington until a deal is reached.

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7. Group of 20 Banks Offers $18 Billion Loan to Fund Oracle AI Data Center Project

With the average mortgage rate hovering near 6%, US homebuyers are seeing the most affordable monthly payments in a year. But San Antonio real estate agent Tavyn Weyman knows how to get them even lower — the trick is to buy new.

Across the country, homebuilders are heavily subsidizing mortgage rates to move unsold inventory, offering deals that rival the record lows of the pandemic. They’re also throwing in perks like free appliances, finished basements, and waived closing costs. Weyman said a private builder recently offered one of his clients a 3.49% fixed rate on a $414,000 home — plus an extra commission to cover lease-breaking fees and another $2,000 toward the first month’s payment. “You want to pay $2,000 a month for a new four-bedroom house at a 2% rate? I can find that now,” he said. “It’s all negotiable.”

A single mother relocating from Florida is considering D.R. Horton Inc.’s 3.99% fixed-rate deal, but what caught her eye was the teaser rate of under 1% for the first year.

These incentives are not signs of a healthy housing market — they’re tactics from an industry fighting for attention as tariffs, the government shutdown, and job insecurity linked to artificial intelligence unsettle consumers.

According to Challenger, Gray & Christmas, year-to-date US job cuts have exceeded 1 million, the highest since the pandemic. October alone saw 153,000 cuts, the most for that month since 2003.

Builders say the expected demand boost from lower rates hasn’t materialized. “We would have expected to see a bigger bump,” D.R. Horton CEO Paul Romanowski told analysts. Other developers echoed his sentiment: Century Communities cited weak entry-level demand, and PulteGroup said first-time buyer orders fell 14% from last year. Renting remains far cheaper, with rents dipping and retention rates near record highs.

Meanwhile, resale listings are no longer scarce, giving buyers more choices. Still, pending sales barely budged in September. “The existing market is a much more formidable competitor to the homebuilders than it has been for a long time,” said Mark Zandi, chief economist at Moody’s Analytics. “There’s a lot of angst about job security, given there’s no hiring. And artificial intelligence is coming on.”

For the first time in decades, new homes were cheaper than existing ones in July and August, according to John Burns Research & Consulting, which said builders are spending roughly 7.5% of sales prices on incentives, up from 4.8% in May 2024.

Not all mortgage buydowns are equal — some last for the full 30-year term, while others only temporarily lower payments. The latter can be risky for buyers unprepared for higher rates later.

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