Michael Eilts

The Oklahoman (Sunday) - - BUSINESS - BY ALEX VEIGA AP Busi­ness Writer

Me­te­o­rol­o­gist Mike Eilts quit his high-rank­ing job with the Na­tional Se­vere Storms Lab­o­ra­tory to start his own busi­ness.

LOS AN­GE­LES — What a dif­fer­ence a month makes.

A pe­riod of rel­a­tive calm on Wall Street that led to a mile­stone-set­ting Septem­ber for the stock mar­ket came to a sud­den, screech­ing halt in Oc­to­ber.

The slide snapped a six­month win­ning streak for the bench­mark S&P 500 in­dex, with Oc­to­ber clock­ing in as the worst month for the mar­ket since Septem­ber 2011.

On Oc­to­ber 29, the S&P 500 nar­rowly missed clos­ing in what Wall Street calls a cor­rec­tion — a drop of 10 per­cent or more from a re­cent high. The in­dex ended the month down 7.5 per­cent from its all-time high set Septem­ber 20 and down 6.9 per­cent for the month. The Nas­daq briefly en­tered into a cor­rec­tion be­fore re­coup­ing some of its losses this week. The tech­nol­ogy-heavy in­dex fin­ished Oc­to­ber down 9.9 per­cent from the record set Au­gust 29 and down 9.2 per­cent for the month.

The mar­ket’s re­ver­sal in Oc­to­ber came as in­vestors grew con­cerned that cor­po­rate prof­its, which drive stock mar­ket gains, could be poised to weaken.

“In­vestors were wor­ried about pol­i­tics and earn­ings,” said Sam Sto­vall, chief in­vest­ment strate­gist for CFRA. “Pol­i­tics be­cause of the up­com­ing midterm elec­tions, as well as the China trade dis­pute. ... And from an earn­ings per­spec­tive, in­vestors started to worry about an earn­ings peak.”

While prof­its have been ex­tremely strong this year — earn­ings for the S&P 500 are es­ti­mated to have risen by 24.8 per­cent in the third quar­ter af­ter a 25.2 per­cent gain in the sec­ond quar­ter — sev­eral big com­pa­nies, in­clud­ing Ama­zon, AT&T and Al­pha­bet, re­ported quar­terly earn­ings or rev­enue dur­ing the month that fell short of ex­pec­ta­tions. And some com­pany ex­ec­u­tives warned of ris­ing costs re­lated to the U.S.-China tar­iffs and in­fla­tion — fac­tors that could weigh on earn­ings next year.

“While nine of 11 sec­tors have seen in­creases in third-quar­ter es­ti­mates, an equal num­ber — nine of 11 — have seen full-year 2019 earn­ings re­duc­tions,” Sto­vall noted.

The dis­ap­point­ing com­pany out­looks added to in­vestors’ jitters about the health of cor­po­rate Amer­ica and the econ­omy.

The Fed­eral Re­serve has been hik­ing in­ter­est rates, and has in­di­cated it’s likely to con­tinue do­ing so for the next two years. The es­ca­lat­ing U.S.-China trade dis­pute is adding to some com­pa­nies’ costs, which could dampen prof­its. And on top of all that, an eco­nomic slow­down in China has traders wor­ried about slower global eco­nomic growth.

In re­sponse, in­vestors piled money into safe­haven, high-yield stocks like elec­tric util­ity AES Corp. and house­hold goods com­pa­nies such as Hormel Foods.

Con­sumer sta­ples and util­i­ties were the only sec­tors in the S&P 500 to eke out gains in Oc­to­ber, of 2.1 per­cent and 1.9 per­cent re­spec­tively. The en­ergy sec­tor and con­sumer dis­cre­tionary stocks, which in­cludes com­pa­nies such as Nor­we­gian Cruise Line and Ama­zon.com, took some of the heav­i­est losses. Both sec­tors lost 11.3 per­cent for the month.

Ama­zon plunged 20.2 per­cent in Oc­to­ber. Net­flix, an­other of this year’s high­fliers, lost 19.3 per­cent dur­ing the month as in­vestors pock­eted prof­its from the stock’s gains this year.

[AP PHOTO]

Spe­cial­ist Glenn Carell works at his post on the floor of the New York Stock Ex­change. A pe­riod of rel­a­tive calm on Wall Street that led to a mile­stone-set­ting Septem­ber for the stock mar­ket came to a sud­den, screech­ing halt in Oc­to­ber.

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