Stocks rally again, but end October with steep losses
Stocks climbed for the second day in a row Wednesday at the end of a brutal month for the global market. Investors applauded strong quarterly results from companies including Facebook and General Motors, but U.S. stocks still finished with their worst monthly loss in seven years.
Many of the biggest gains Wednesday came from technology and internet companies and retailers, which plunged early in October as investors worried about rising interest rates and the U.S.-China trade dispute.
The S&P 500 hadn’t risen for two consecutive days since late September. It finished October with a loss of 6.9 percent, its worst since September 2011. The third quarter of this year was the best in five years for U.S. stocks, but those gains were wiped out this month. The S&P 500 is now up 1.4 percent for the year.
Stocks began sinking on Oct. 3 as interest rates rocketed higher. Even after those gains eased, investors kept selling stocks as they worried about the trade dispute and other factors that could also hurt economic growth and company profits.
The losses exceeded the market average for all eight of Chattanooga’s publicly traded companies last month. Collectively, the local stock-traded companies shed nearly $5 billion in market value during October.
Investors are that much more nervous because corporate profit growth is already expected to slow in 2019 after it jumped this year, a big portion of which stemmed from the onetime corporate tax cut.
Schroders Investment Strategist Marina Severinovsky
said several different factors could help stocks over the next few weeks: corporate stock purchases are expected to increase, and U.S. President Donald Trump and China’s Xi Jinping could meet next month, an opportunity for progress in U.S.-China trade talks.
“If there’s any kind of movement, even a stay of execution (on tariff hikes), could be a positive for the market,” she said. Severinovsky added that whatever the outcome of next week’s midterm elections, stocks will probably rise once they are over.
“Markets tend to rally on certainty,” she said.
The S&P 500 index rose 29.11 points, or 1.1 percent, on Wednesday to 2,711.74. The Dow Jones Industrial Average gained 241.12 points, or 1 percent, to 25,115.76. The Nasdaq composite jumped 144.25 points, or 2 percent, to 7,305.90.
Facebook had a mixed third quarter, with betterthan-expected earnings and disappointing revenue. But after the company’s recent losses, even that was a relief to Wall Street. After a 2.9 percent gain Tuesday, the stock rose 3.8 percent to $151.79.
Other high-flying internet and tech stocks did better. Netflix jumped 5.6 percent to $301.78 and Amazon soared 4.4 percent to $1,598.01. Apple, which held up much better than the broader stock
market this month, gained 2.6 percent to $218.86.
Facebook has plummeted 30 percent since reaching a record high in late July. That same month, the social network reported weaker-thanexpected user growth and said it’s spending more on security, moderation and product development.
Investors worry that companies like Facebook will be subject to more regulation following several data privacy scandals as well as online election meddling from outside the U.S. Facebook is also facing harsh criticism that its platform is being used to inflame ethnic and religious conflict in Myanmar. On top of all that, high-tech stocks like Facebook have stumbled this month as investors looked for safer, steadier options.
Amazon fell 20 percent for the month, wiping out around $200 billion in market value. The tech-heavy Nasdaq skidded 9.2 percent, its biggest one-month loss since November 2008.
General Motors also did far better than expected in the third quarter as it raised prices in North America and its China division held up well. The company also moved to cut costs by offering buyouts to about 18,000 white-collar employees in North America. The stock jumped 9.1 percent to $36.59.