{"id":61746,"date":"2024-11-01T02:00:00","date_gmt":"2024-11-01T07:00:00","guid":{"rendered":"https:\/\/www.tradestation.com\/insights\/?p=61746"},"modified":"2024-11-01T08:25:06","modified_gmt":"2024-11-01T13:25:06","slug":"october-2024-recap","status":"publish","type":"post","link":"https:\/\/www.tradestation.com\/insights\/2024\/11\/01\/october-2024-recap\/","title":{"rendered":"Stocks Finish October in the Red as Big Tech Breaks Lower"},"content":{"rendered":"\n

Stocks just declined for the first time in six months, thanks to weak guidance from Microsoft and Meta Platforms.<\/p>\n\n\n\n

The S&P 500 spent most of October above the level where it ended September. However it plunged in the final session, giving the index a 0.7 percent drop on the month. It was the first decline since April and only the second negative month since the equities began a sprint higher last November.<\/p>\n\n\n\n

Fading enthusiasm for technology stocks, higher bond yields and weak earnings dragged on the market. The Nasdaq-100 hit resistance near its July peak as semiconductors languished. Then on Wednesday afternoon, MSFT issued weak guidance for its Azure cloud-computing unit. META suggested it will maintain heavy spending on machine learning. Super Micro Computer (SMCI), a darling of the AI trade early in the year, also crashed after its auditor cited potential accounting issues.<\/p>\n\n\n\n

Solar-energy stocks and homebuilders were the weakest industry groups overall. Both are sensitive to interest rates, but each had their own specific challenges. Solar companies warned of slowing demand, while builders saw profit margins narrow. <\/p>\n\n\n\n

Airlines and cruise-ship operators were some of the top performers thanks to improved results and lower fuel costs. Banks and financials also climbed on strong quarterly results.<\/p>\n\n\n\n

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S&P 500, daily chart with select patterns and indicators. Notice how the index initially held at the September high but broke it yesterday.<\/figcaption><\/figure>\n\n\n\n

Interest Rates<\/h2>\n\n\n\n

As year-end approaches, investors may look for more signs of rotation away from large growth stocks in favor of value names that could benefit from quicker growth.<\/p>\n\n\n\n

Most of the numbers were consistent with a healthy economy. Payrolls surprised to the upside and initial jobless claims fell sharply. Retail sales beat estimates for the fourth straight month, and might have been even higher if gasoline prices hadn’t dropped. Inflation data roughly matched estimates. Interestingly, home prices and shelter costs showed signs of easing. That could be good news over the longer run because it’s more than one-third of the consumer price basket.<\/p>\n\n\n\n

The strong economic data helped lift the yield on the 10-year Treasury note<\/a> above 4.3 percent for the first time since July. Further upside may hurt sentiment toward stocks. However a peak around these levels could confirm the downtrend in borrowing costs. Big events to watch include non-farm payrolls this morning, the Federal Reserve meeting next Thursday and the Consumer Price Index (CPI) on November 13.<\/p>\n\n\n\n

U.S. Presidential elections on Tuesday are another major catalyst. See the table below for more key events this month.<\/p>\n\n\n\n

Big Movers in October<\/h2>\n\n\n\n
<\/td><\/td>Top Gainers in the S&P 500 Last Month<\/strong><\/td><\/tr>
United Airlines (UAL)<\/td>+37%<\/td>The airline beat estimates as capacity reductions boosted profit margins<\/td><\/tr>
Paycom Software (PAYC)<\/td>+25%<\/td>The software company, which fell sharply a year ago, jumped to its highest level in 2024 on better-than-expected profit and sales.<\/td><\/tr>
Norwegian Cruise Line (NCLH)<\/td>+24%<\/td>The cruise-ship operator beat estimates thanks to strong pricing and demand.<\/td><\/tr>
Raymond James Financial (RJF)<\/td>+21%<\/td>The brokerage beat estimates as client assets hit a new record.<\/td><\/tr>
Lamb Weston (LW)<\/td>+20%<\/td>The food company, which fell sharply in July, jumped after activist investor Jana Partners bought shares and pushed for a potential takeover.<\/td><\/tr><\/tbody><\/table>
Source: TradeStation Data<\/em><\/figcaption><\/figure>\n\n\n\n
<\/td><\/td>Top Decliners in the S&P 500 Last Month<\/strong><\/td><\/tr>
Qorvo (QRVO)<\/td>-31%<\/td>The provider of wireless chips issued weak guidance because of a shift in the Android-phone market.<\/td><\/tr>
Estee Lauder (EL)<\/td>-31%<\/td>The cosmetics company missed revenue forecasts and revoked its guidance amid weak Chinese demand.<\/td><\/tr>
Super Micro Computer (SMCI)<\/td>-30%<\/td>Ernst & Young resigned as the AI company’s auditor, citing issues with its financial statements.<\/td><\/tr>
Huntington Ingalls Industries (HII)<\/td>-30%<\/td>Uncertain timing of a U.S. Navy contract caused the shipbuilder to cut its guidance.<\/td><\/tr>
Enphase Energy (ENPH)<\/td>-27%<\/td>The solar-energy company missed estimates and issued weak guidance as demand slowed.<\/td><\/tr><\/tbody><\/table>
Source: TradeStation Data<\/em><\/figcaption><\/figure>\n\n\n\n

Sector Watch<\/h2>\n\n\n\n
Financials <\/td>+2.6%<\/td><\/tr>
Communications<\/td>+1.8%<\/td><\/tr>
Energy<\/td>+0.9%<\/td><\/tr>
S&P 500<\/td>-1%<\/td><\/tr>
Utilities<\/td>-1.1%<\/td><\/tr>
Industrials<\/td>-1.2%<\/td><\/tr>
Technology<\/td>-1.6%<\/td><\/tr>
Consumer Discretionary<\/td>-1.7%<\/td><\/tr>
Materials<\/td>-3.2%<\/td><\/tr>
Real Estate<\/td>-3.3%<\/td><\/tr>
Consumer Staples<\/td>-3.5%<\/td><\/tr>
Healthcare<\/td>-4.6%<\/td><\/tr><\/tbody><\/table>
Source: TradeStation Data<\/em><\/figcaption><\/figure>\n\n\n\n

Key Economic Events in October<\/h2>\n\n\n\n

Below are some key economic events from last month.<\/p>\n\n\n\n