Stocks’ choppiness in October can be an opportunity
A view from the Alaska Bootanical Park, fall, Halloween and harvest season themed version of the Alaska Botanical Park with special displays, inside the Far North Bicentennial Park, Alaska, United States on September 22, 2024.
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This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
Rebound rallyU.S. stocks rebounded on Tuesday, with all major indexes rising. Technology stocks, in particular, rallied to lift the Nasdaq Composite. The pan-European Stoxx 600 index lost 0.55%. European liquor producers like LVMH, Pernod Ricard and Diageo slumped after China announced anti-dumping measures on brandy products imported from the European Union.
Cooling oil pricesCrude oil prices fell on Tuesday amid reports Israel might focus on striking Iran’s military sites in retaliation for its missile attacks, according to reports by The New York Times and The Jerusalem Post. Both West Texas Intermediate and Brent futures retreated 4.63% yesterday, halting the red-hot rally oil prices have experienced the past week.
GM’s not slowing downGeneral Motors aims to bring in between $13 billion and $15 billion in adjusted earnings before interest and taxes for 2024. The Detroit automaker also expects its 2025 adjusted earnings to be in a “similar range,” said CFO Paul Jacobson during the company’s investor day. That’d be an accomplishment, given the slowdown in the industry.
Shorting RobloxShort seller Hindenburg Research alleged on Tuesday that Roblox conflated daily active users with the number of people visiting its platform. This distorts the true number of people accessing Roblox because DAUs could include bots or alternate accounts, Hindenburg said. Roblox denies all claims in the report.
[PRO] Slower earnings growthThird-quarter earnings season ramps up this week, with banking giant JPMorgan Chase slated to announce its financial results on Friday. Investors might want to temper expectations. For companies in the S&P 500, Wall Street projects a slower pace of earnings growth compared with its estimate in June, according to FactSet data.
October in the U.S. is the season for pumpkin spice, but the month also harbors the dangerous edge of Halloween.
And getting spooked and soothed alternately is indeed what markets are doing in October.
After falling 0.96% on Monday, the S&P 500 added 0.97% on Tuesday. (Though it should be noted that doesn’t necessarily mean the S&P erased its losses and is up 1 basis point from Monday to Tuesday. Percentages are hard.)
Likewise, the Nasdaq Composite slipped 1.18% Monday but climbed 1.45% yesterday, zapped higher by a rally in tech stocks like Nvidia, Palo Alto Networks and Meta. The Dow Jones Industrial Average didn’t have that dramatic a swing, losing 0.94% Monday but advancing 0.3% Tuesday.
October, then, is truly living up to its reputation as the most volatile month for stocks. But investors should keep in mind the uncomfortable swings in markets aren’t always a good signal for the underlying health of stocks.
“While our expectation is for October to remain choppy, we don’t view the overall market action to be bearish and encourage investors to maintain perspective on the longer-term trends,” Robert Sluymer, technical strategist at RBC Wealth Management, wrote to clients in a Tuesday note.
Investment bank Piper Sandler has the same opinion on October’s turbulence. “October is historically a ‘backing and filling’ month as investors react to Q3 earnings results,” Craig Johnson, chief market technician, wrote in a Tuesday note.
In fact, when stocks dip because of mild repricing or a correction, that’s a good opportunity for investors to swoop in, according to Johnson.
The see-saw motion of stocks in October isn’t all that bad, then, if investors can seize the right time to enter the market or solidify their positions further. It doesn’t have to be spooky season all the time.
– CNBC’s Hakyung Kim, Samantha Subin and Alex Harring contributed to this story.
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