MARKETS TODAY Oct 27 (Vica Partners) – The S&P 500 down 0.61% as of 4.00 p.m. Eastern. The Dow Jones Industrial Average up 194 points, or 0.61%, to 32,033. The tech based Nasdaq down 1.63%.
Stock indexes were mixed during the trading session, the 10-year Treasury down with a yield at 3.924%. U.S. Dollar Index (DXY) was flat at $110.50. Oil prices mixed with Brent crude $96.96 + 1.33%, and US West Texas Intermediate $88.55, -0.59%.
Reports on economic activity today
Real gross domestic product (GDP) increased at an annual rate of 2.6 percent in the third quarter of 2022 (analysts were expecting 2.3%); in contrast to a decrease of 0.6 percent in the second quarter. The increase in the third quarter primarily reflected increases in exports and consumer spending that were partly offset by a decrease in housing investment. Note – changes in GDP are the most popular indicator of the nation’s overall economic health.
US initial jobless claims in the week ending October 22, the seasonally adjusted initial claims was 217,000, an increase of 3,000 from the previous week’s and below analysts’ 220,000 estimate.
Continuing Jobless Claims in the United States increased to 1.44m in the week ending October 15 of 2022 from 1.38m in the previous week
Megacap earnings continue to have an effect on the market this week
Amazon (AMZN) reported “impressive results” today, third quarter sales rose 15% from a year earlier, while net income was $2.9 billion, a 9% decline from the same period last year.
- Revenue: $127.1 billion actual versus consensus $127.63 billion
- Adjusted Earnings Per Share (EPS): 28 cents actual versus consensus 22 cents
Amazon Web Services (AWS) segment sales increased 27% year-over-year to $20.5 billion versus consensus $21 billion. Amazon’s cloud computing division continues to be a strong profit driver for the company. Amazon posted a $2.9 billion profit for the three-month period,
For the fourth-quarter, Amazon guided to between $140 billion and $144 billion instead of the expected $155 billion that sent stock prices down more than 15% in after hours.
Meta (META) Shares of Meta fell 24.5% Thursday on the company’s third-quarter earnings miss and a weak fourth-quarter outlook. Meta reported quarterly revenue of $27.7 billion Wednesday, a decline of more than 4% year over year and its second straight quarterly decline. Its profit dropped 52% to $4.4 billion.
Meta gave cautionary fourth quarter guidance as the company is expecting revenue for the fourth quarter to be $30 billion to $32.5 billion the low end of analyst’s expectations of $32.2 billion.
Value is king and performance in key sectors remain strong (emerging 30 day Sector watchlist)
Rental & Leasing Industry +49.4%, Oil Well Services & Equipment Industry +42.8%, Iron & Steel Industry +20.1%, Biotechnology & Pharmaceuticals Industry +19.3%, Airline Industry +18.4%, Broadcasting Media & Cable TV Industry +17.9%, Construction & Mining Machinery Industry +17.6%, Aluminum Industry +16.0%, Life Insurance Industry +15.8%, Educational Services Industry +15.4%.
IMPORTANT TO READ as low interest rates will return
The Federal Reserve will be forced to cut interest rates in 2023 if a deep recession occurs as the cure for inflation is not just raising rates. As we see a significant policy change coming by late Spring of 2023 with Powell reversing direction… just look at 12 month declining lower commodity pricing and new reports on rising retail inventories.
Yearly commodity prices will rise “as there are production shortages” which include: iron, copper and crude oil. Upside will continue!
Solid strategy for these type of market days ….
We suggest investing in companies that have solid balance sheets and offer dividends.
Best to continue to cost average buy value stocks and resist most all tech and growth stocks where companies have negative margins. Our Teams forecast a negative 5-7% valuation correction for speculative stocks. DON’T try to time market lows!
*** Watch for our emerging 30/ 60/ 90 day Sector and leading company watchlist’s
*** Look to Index ETF’s like SPY to outperform stocks and most managed funds
*** Energy is the Top Performing Sector in S&P 500 Year to Date and will regain strength shortly
*** Banks will profit from higher interest rates on new loans and other products which will offset defaults
