Medicare Agent News: Big Tech's Big Moment

Monday, October 24, 2022

Big Tech's Big Moment

By Alex Eule | Monday, October 24

Focus on Earnings. U.S. stocks put together another strong day on the eve of the most important three-day stretch of earnings season. The Dow Jones Industrial Average was up 417, or 1.3%, while the S&P 500 rose 1.2%. The strength in U.S. markets was a contrast to Asia, where Chinese politics continue to weigh on stocks.

Xi Jinping secured a third term as China's president over the weekend. The Wall Street Journal wrote that Xi "has consolidated control of China’s ruling Communist Party to a degree unseen since Mao Zedong." The dynamic opens new questions about China's commitment to private business and its embrace of global markets. Hong Kong's Hang Seng Index fell 6.4% overnight, its worst day since Nov. 2008. The Shanghai Composite Index was off 2%. Chinese tech companies were hit particularly hard amid new worries that the government will continue its crackdown on tech platforms like Alibaba and Tencent. Those stocks fell 12.5% and 14.2%, respectively, on the day, and they're both down more than 60% over the last 12 months.

Xi's stronger grip on power means China is also likely to continued its Zero-Covid policies, which could weigh on China's economy and cause protracted issues for certain parts of the global supply chain.

In the U.S., though, investors brushed off any new concerns. Here, the focus continues to be on Federal Reserve policy, with growing hope (once again) that the Fed is moving closer to a pause in rate increases. A rate pause -- or at least the hope of one -- could allow investors to focus their full attention on earnings. And it's just in time.

Some 165 companies in the S&P 500 are reporting earnings this week, roughly 45% of the index. The highlights will come from the Big Tech companies over the next three days. We'll be previewing all of the earnings as the week progresses and covering them live here.

The stakes are high. "This is the key week of the earnings season and the best hope for 4th quarter recovery," Louis Navellier of Navellier & Associates wrote today. "As long as earnings continue to grow, forecasts for a recession lack credibility. If forecasts begin to be cut significantly, we will almost certainly see another leg down."

Meanwhile, another tech story could finally get clarity this week, with Elon Musk facing a Friday deadline to complete his $44 billion purchase of Twitter. Nothing is a sure thing with this on-again-off-again deal, but investors are expecting it to finally close. Twitter shares rose 3.3% on the day to close at $51.52, less than $3 off Musk's $54.20 per share offer price for the company. My colleague Connor Smith has more here on the three remaining questions for the deal.