Medicare Agent News: Buy Back Better

Thursday, October 20, 2022

Buy Back Better

By Nicholas Jasinski | Wednesday, October 19

Tug of War. Today was a battle of the macro versus the micro—and the macro narrowly won.

Netflix stock soared 13% today on the back of its much better-than-expected third-quarter subscriber gains and above-consensus forecast. United Airlines Holdings beat on the top and bottom lines and guided to stronger earnings in the last three months of the year, including an operating profit margin that would top 2019's level for the first time since the pandemic began. The airline's stock gained 5% today.

Intuitive Surgical, Interactive Brokers Group, and ASML Holding all topped sales and earnings estimates, sending their shares up at least 6% each.

Normally such a strong batch of results from companies across a wide swath of industries would be met with a broader rally in the market. Not today.

The third-quarter results are about what happened in the past, and investors are more focused on what comes next. And there's still plenty of concern about a recession in 2023.

Amazon.com founder Jeff Bezos was the latest corporate leader to add his voice to the recession chorus, writing in a tweet last night: "The probabilities in this economy tell you to batten down the hatches."

That's not stopping the Federal Reserve from tightening monetary policy, however. Officials including Neel Kashkari and James Bullard gave speeches today emphasizing that the path of interest rates from here is meaningfully higher. And bond markets are still moving to price in more tightening.

Treasury yields across the curve are now mostly comfortably above 4%, with even the 3-month Treasury bill yield ticking above that level today, before settling around 3.99%. The 2-year yield rose 0.12 percentage point, to 4.55%. And the 10-year and 30-year yields are both around 4.13%. Futures markets now have the fed-funds rate peaking above 5% by early next year.

No matter the time frame, yields are high and rising, putting pressure on stock valuations and presenting real alternatives to equities for investors. That's also boosting the U.S. dollar, which is back near its highs of the year versus a basket of other currencies.

For stocks, that context outweighed today's spate of individual earnings hits. The S&P 500 slid 0.7%, the Dow Jones Industrial Average lost 0.3% today, and the Nasdaq Composite fell 0.9%.