🏛 Fed adds new wrinkle

Plus: China's COVID lockdowns | Wednesday, November 02, 2022

Open in app View in browser   Presented By Equitybee   Axios Closer By Hope King and Nathan Bomey · Nov 02, 2022 Wednesday ✅. Today's newsletter is 695 words, a 2½-minute read. 🚨 Situational awareness: Shares of Qualcomm fell 7% after the bell as the company slashed forecasts and said cellphone sales are down double digits from last year. 🔔 The dashboard: The S&P 500 closed down 2.5% in a volatile session as investors tried to grasp the Fed's stance on future rate decisions. Biggest gainer? Match Group (+4.2%), the dating app, posted higher-than-expected third-quarter revenue. Biggest decliner? RXO (-15.5%), the truck brokerage services provider, on its second day of trading after completing its spinoff from XPO.     1 big thing: Fed sees rates rising slower, but higher Photo illustration: Shoshana Gordon/Axios. Photo: Susan Walsh/Pool/AFP via Getty Images   The headlines out of the Fed's meeting earlier today were all about the widely expected 0.75 percentage point interest rate increase. The news was in two sentences that give a clear view of how the Fed's plans are evolving. The central bank is soon going to slow down the speed at which it raises interest rates, but sees the level the rates will ultimately reach as higher than just a couple of months ago, Axios' Neil Irwin writes. Why it matters: It matters more for stock and bond prices where rates end up than exactly which month they get there. So a higher "terminal rate" is bad for financial assets. But by moving more gradually, it is less likely the Fed will make a massive error by overshooting. It was that first revelation that drove a late-afternoon sell-off on Wall Street, with the S&P 500 closing down 2.5% and Treasury yields rising. How it happened: In its written policy statement issued at 2pm ET, the Fed added language saying that in future rate increases, it will take into account the cumulative monetary tightening that has occurred thus far and the lagged effects of its policies. Markets rallied. But in his comments at 2:30pm, chair Jerome Powell added wrinkles. He said that data since their last meeting suggests that the "ultimate level of interest rates will be higher than previously expected." Later, he emphasized that pausing rate increases is not at all on the table. In other words: Yes, the next rate hike in December might be 0.5 percentage points instead of 0.75 points. But higher borrowing costs are here to stay.     2. Charted: S&P 500 milestone Data: Spencer Stuart; Chart: Erin Davis/Axios Visuals Nearly one-third of all board directors among S&P 500 companies are women, Hope writes. Women now represent 32% of all S&P 500 directors — the most ever. That's up from 30% last year, and it's an 86% increase over the past decade when the makeup of women on boards was just 17%, a new study from leadership consulting firm Spencer Stuart finds. Why it matters: Boards are playing a bigger role in ensuring more diversity inside businesses — especially for leadership pipelines. Go deeper.     3. What's happening ✋ Twitter won't reinstate blocked users for at least a few weeks, pushing any changes beyond the midterm elections. (WSJ) 🚙 Ford's U.S. sales declined by 10% in October, as supply chain issues delayed shipments to dealers. (CNBC) 🏈 Dan Snyder is exploring a possible sale of the NFL's Washington Commanders. (Axios)     A message from Equitybee 3 steps to invest in high-growth, VC-backed startups     With Equitybee, you can get access to investment opportunities traditionally dominated by VCs. Here's how: Join the accredited investor network. Take your pick of high-growth startups. Grow your portfolio. Get started in minutes.     4. China's COVID lockdowns disrupt Apple supplier Foxconn employees take shuttle buses to head home on Oct. 30 in Zhengzhou, China. Photo: VCG/VCG via Getty Images   Local officials in the Henan province of China on Wednesday ordered a seven-day COVID lockdown of a city district that houses an industrial park owned by Foxconn, the largest iPhone manufacturer, according to Reuters. The restrictions mark a retightening of a quasi-lockdown of Zhengzhou, a city of 13 million people, as hundreds of new COVID cases have popped up over the past few days, Hope writes. Zoom in: The new lockdowns also put greater pressure on the Apple supplier, which has been trying to smooth tensions with workers and to keep them from fleeing. One source told Reuters that iPhone production at the factory could fall by up to 30% next month, though Foxconn is trying to make up that lost production at other facilities. Foxconn and Apple did not immediately respond to requests for comment. The big picture: The potential production impact highlights the ongoing disruptions from the Chinese government's measures to fight COVID.   Share Axios and earn rewards If you like this newsletter, your friends may, too! Refer your friends and get free Axios swag when they sign up. Be a good friend and share   5. Virtual MBAs are trending Illustration: Sarah Grillo/Axios   Virtual MBA programs are on the rise, with schools seeking to combat declining demand for full-time traditional programs, the Wall Street Journal reported. State of play: The number of online offerings more than doubled between 2009 and 2020 at accredited business schools, according to the report. Now even highly ranked programs — including UPenn's Wharton School and Georgetown's McDonough School of Business — are joining the trend. NYU's Stern School of Business and Cal Berkeley's Haas School of Business offer the option already. The bottom line: The prices are the same, whether you're in the classroom or at your kitchen counter. But flexibility is increasing.     6. What they're saying "Any content (or account) promoting election denial and other harmful lies about election results cannot be allowed to exist on his platform." — NAACP president Derrick Johnson on meeting with Elon Musk.     A message from Equitybee Unlock access to high-growth startups     Equitybee gives accredited investors unprecedented access to high-growth, VC-backed startups. What's in it for you: Invest in startups at past valuations by funding employee stock options. Then, you receive a portion of the future share. Get started in minutes.   Today's newsletter was edited by Pete Gannon and copy edited by Sheryl Miller. Why stop here? Let's go Pro. Join the thousands of professionals using Axios Pro to keep up with the companies, deals and trends changing their industries.   Axios thanks our partners for supporting our newsletters. If you're interested in advertising, learn more here. Sponsorship has no influence on editorial content. Axios, 3100 Clarendon B‌lvd, Arlington VA 22201   You received this email because you signed up for newsletters from Axios. Change your preferences or unsubscribe here.   Was this email forwarded to you? Sign up now to get Axios in your inbox.   Follow Axios on social media: