Student loan portal opens, Musk's bot plan and more: Tuesday's 5 things to know

Here are the key events taking place on Tuesday that could impact trading.

STUDENT LOAN PORTAL OPENS: The online application portal for President Joe Biden’s student loan handout program officially rolled out Monday. However, some borrowers are not eligible for the one-time relief.

In late September, the Biden administration altered its guidance so that borrowers with privately held Federal Family Education Loan (FFEL) Program loans or Perkins loans could no longer qualify for student debt forgiveness by consolidating them into direct loans. There is an exception for those who applied to consolidate such loans prior to Sept. 29.

The wording on the Education Department’s StudentAid.gov website under the section about FFEL and Perkins loan eligibility was altered at the time to say, "As of Sept. 29, 2022, borrowers with federal student loans not held by the ED cannot obtain one-time debt relief by consolidating those loans into Direct Loans."

BIDEN ADMIN RELEASES INITIAL STUDENT LOAN HANDOUT APPLICATION WEEKS BEFORE MIDTERMS

That section previously said borrowers with privately held federal student loans "can receive this relief by consolidating these loans into the Direct Loan program," according to an older version of the page archived on the WayBack Machine. The change came amid multiple states suing to pump the breaks on the student loan handout program.

"Our goal is to provide relief to as many eligible borrowers as quickly and easily as possible, and this will allow us to achieve that goal while we continue to explore additional legally-available options to provide relief to borrowers with privately owned FFEL loans and Perkins loans, including whether FFEL borrowers could receive one-time debt relief without needing to consolidate," an Education Department spokesperson told FOX Business in early October.

"The FFEL program is now defunct and only a small percentage of borrowers have FFEL loans" the spokesperson added. "This is a completely different program than Direct Loans."

Approximately 42.8 million people have federal student loans as of the third quarter of fiscal 2022, according to Education Department data.

The student loan relief program, according to the StudentAid.gov website, seeks to cancel up to $20,000 in debt for Pell Grant recipients and up to $10,000 for non-Pell grant recipients, both subject to income requirements. Individual borrowers must have 2020 or 2021 adjusted gross incomes of less than $125,000, and it’s less than $250,000 for married couples.


NATURAL GAS WORRIES: New England power producers are preparing for potential strain on the grid this winter as a surge in natural-gas demand abroad threatens to reduce supplies they need to generate electricity.

New England, which relies on natural-gas imports to bridge winter supply gaps, is now competing with European countries for shipments of liquefied natural gas, following Russia’s halt of most pipeline gas to the continent. Severe cold spells in the Northeast could reduce the amount of gas available to generate electricity as more of it is burned to heat homes.

The region’s power-grid operator, ISO New England Inc., has warned that an extremely cold winter could strain the reliability of the grid and potentially result in the need for rolling blackouts to keep electricity supply and demand in balance. 

The warning comes as executives and analysts predict power producers could have to pay as much as several times more than last year for gas deliveries if severe weather creates urgent need for spot-market purchases.

BIDEN ADMIN KEEPS DELAYING OIL AND GAS PERMITTING DUE TO MATH ERROR

"The most challenging aspect of this winter is what’s happening around the world and the extreme volatility in the markets," said Vamsi Chadalavada, the grid operator’s chief operating officer. "If you are in the commercial sector, at what point do you buy fuel?"

Power producers in New England are limited in their ability to store fuel on site and face challenges in contracting for gas supplies, as most pipeline capacity is reserved by gas utilities serving homes and businesses. Most generators tend to procure only a portion of imports with fixed-price agreements and instead rely on the spot market, where gas prices have been volatile, to fill shortfalls.

New England residents are facing some of their largest electricity bills in years and are likely to pay even more this winter because of higher gas prices. Utilities purchase electricity from generators on the wholesale market and recoup those costs from customers.

Thad Hill, chief executive of Calpine Corp., which operates several plants in the region, said he expects fuel supplies this winter to be sufficient but expensive. The circumstances, he said, might warrant the need for the grid operator to implement stronger incentives for power producers to store or contract for firm supplies ahead of winter.

"The goal should be to put in place a market mechanism that’s actually durable for all but the most egregious situations," he said.

GOVERNMENT REPORTS: Reports on factory activity and housing will be released Tuesday morning.

 The Federal Reserve will post industrial production data for September at 9:15 a.m. ET Tuesday.

Factory output is expected to increase 0.1% for the month, following a surprise decline of 0.2% in August (the report measures the change in the volume of goods produced in the U.S. regardless of price, so there is no distortion from inflation). The plant-use rate is seen holding steady at 80.0%:

Tuesday will bring the first of three housing-related reports due out this week. At 10 a.m. ET, the National Association of Homebuilders will release its Housing Market Index for October. 

This closely followed gauge of homebuilder sentiment is anticipated to fall three points to 43, the lowest since May 2020 (lowest in 9 ½ years, or since April 2013, if you exclude the pandemic), signaling that less than half of NAHB members regard business conditions as good. 

It would also mark the tenth straight monthly drop, the most consecutive declines since the sentiment index launched in January 1985, as high inflation and soaring mortgage rates hurt home sales and buyer traffic. Other reports to watch for are housing starts and building permits on Wednesday, and existing home sales on Thursday, both for the month of September.

STOCKS HIGHER MONDAY: U.S. stocks surged Monday, another day of outsize moves on Wall Street, as investors tried to make sense of an unsettled economic outlook and geared up for another batch of corporate earnings. 

The S&P 500 rose 94.88 points, or 2.6%, to 3677.95. The index slid 2.4% Friday after a 2.6% gain Thursday. The Dow Jones Industrial Average added 550.99 points, or 1.9%, to 30185.82, while the Nasdaq Composite jumped 354.41 points, or 3.4%, to 10675.8. 

The indexes pulled out of their latest selloff in part on the strength of earnings reports, including those by some of the nation's biggest banks. 

Investors were bracing for evidence that many companies were already mired in a slump. So far, they have been pleasantly surprised, said Quincy Krosby, chief global strategist at LPL Financial. 

"The pessimism has been palpable, and the bar had come down for earnings reporting," Krosby said. "We've seen primarily positive surprises. When you have a market that's oversold, it doesn't take much of a catalyst to have it move up." 

Investors said the big gains and losses underscored angst over a possible recession and the pace of interest-rates increases, rather than fundamental changes in the economy. 

Adding to those worries, recent inflation data showed rapid price growth has been hard to slow, making it more likely that the Federal Reserve will continue to raise rates aggressively. 

"We're going into a global recession so there's very little scope for anything to be rallying," said Hani Redha, a portfolio manager at PineBridge Investments. "There's still a downtrend here."

3Q EARNINGS: The next big test for the market is earnings season. 

Results gather pace this week with reports due in the coming days from Goldman Sachs Group, Johnson & Johnson, Netflix and Tesla, among other major companies. 

Results and guidance from executives about the next few quarters will pose a test for a market that has been buffeted by rising rates this year. 

Though analysts cut estimates for third-quarter earnings growth in recent months, some investors say forecasts are still too upbeat about the prospects for corporate profits over the next year, given the likelihood of a recession. 

Ticker	Security	Last	Change	Change %
GS	THE GOLDMAN SACHS GROUP INC.	417.35	+13.35	+3.30%
JNJ	JOHNSON & JOHNSON	149.12	+1.21	+0.82%
NFLX	NETFLIX INC.	554.60	-0.44	-0.08%
TSLA	TESLA INC.	142.05	-5.00	-3.40%

The U.S. is forecast to contract and unemployment to rise in the coming 12 months, according to a Wall Street Journal survey of economists. 

"The market has priced the Fed hikes and the tightening of financial conditions quite well but it hasn't priced the impact of that tightening yet," Redha said. 

Shares of Bank of America rose $1.92, or 6.1%, to $33.62 after the lender said per-share earnings topped analysts' forecasts in the third quarter. 

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Some of the biggest U.S. banks reporting last week said they were nervous about a recession, but their third-quarter earnings showed few signs of one yet. Bank of New York Mellon, the world's biggest custody bank, jumped $1.95, or 5.1%, to $40.36 after also reporting results that beat expectations.