Medicare Agent News: Bracing for a Big Week

Tuesday, October 11, 2022

Bracing for a Big Week

By Alex Eule | Monday, October 10

'An Unstable World.' Stocks fell for a fourth straight session Monday, as investors braced for a busy week of news.

Third-quarter earnings season gets under way later this week, just as the latest inflation data is released on Wednesday and Thursday. Also on Wednesday, the Federal Reserve releases the minutes from its last policy meeting, a backwards looking but still important indicator of Fed sentiment.

It all means the market could be a very different place by Friday. We'll have more about earnings in this newsletter in the coming days. In the meantime, just get ready for lots of management talk about the strong dollar, inflation, inventories, profit margins, labor availability, and the holiday shopping season.

Tech stocks were among the hardest hit today, with growing concerns about U.S. policy toward China and what it means for chip makers selling into the Chinese market, as well as sourcing their manufacturing in Asia. The PHLX Semiconductor Index, or SOXX, finished the day down 3.5%. The chip weakness follows a bad day on Friday, when the the SOXX fell 6% after chip maker Advanced Micro Devices warned about a weak third quarter.

Much of the chip maker's weakness stems from a troubled PC market, a key user of semiconductors. Today, research firm IDC said that global PC shipments fell 15% during the quarter that ended in September.

The tech-heavy Nasdaq Composite finished the day down 1%, closing at a new low for the year, and at its lowest level since July 2020. Tech earnings get under way next week with reports from IBM and Netflix. (The deluge of big-tech earnings starts two weeks from now.)

One thing investors can't blame today? The bond market. Rising yields have been a frequent culprit for this year's selloffs, but the bond market was closed Monday for Columbus Day. On Friday, the 10-year Treasury yield settled at 3.883%, rising for the 10th consecutive week. That's its longest stretch of weekly gains since at least November 1977, according to Dow Jones Market Data.

The bond market reopens tomorrow, with the usual worries about economic growth, inflation, and Fed monetary policy. On Monday, Lael Brainard, the Fed's vice chair, laid out a somewhat optimistic view that inflation would soon respond to the Fed's rapid rise in interest rates. She also signaled that the Fed was aware of the other risks filling the market, potentially suggesting that the Fed would be cautious in continuing its rate hikes. At a Chicago meeting of economists titled "Shocks and Aftershocks: Finding Balance in an Unstable World," Brainard said:

The combined effect of concurrent global tightening is larger than the sum of its parts. The Federal Reserve takes into account the spillovers of higher interest rates, a stronger dollar, and weaker demand from foreign economies into the United States, as well as in the reverse direction. We are attentive to the risk of further adverse shocks—for instance, from Russia's war against Ukraine, the pandemic, or China's zero-COVID policies.

The world has plenty of things to worry about. The Fed is hoping it doesn't add to the list.