Stocks have struggled all month, finishing this past Friday, October 30th, with the Nasdaq Composite dropping 3%. Intel led the index lower, plummeting 28.5%, a never before loss ever recorded. The government and Nvidia took a major part of the loss, as the company lost $17 billion on paper, according to The Wall Street Journal. Artificial intelligence, technology and semiconductor stocks have floundered for several months, finally giving way to serious selling the past week. Friday’s Nasdaq Composite index took the hit as incoming 3rd quarter earnings of many companies gave hints of upcoming troubles. The Magnificent Seven group turned sluggish as many included stocks, according to FactSet, are expected to report slower growth than members of the S&P 500 for the quarter. Debt loads are heavy, with interest rates creeping up, weighing on the bottom line. “Right now, we’re seeing tremors in the ground,” said Peter Boockvar, the chief investment officer at OnePoint BFG Wealth Partners. “You can’t necessarily connect the cracks to each other. But when enough cracks take place, does that eventually lead to the road caving in?” He added, “It’s a major gut check for the market.” Bitcoin led all cryptocurrencies down Friday, off 5%, while opening Monday in the $77,000 range. Interest in cryptocurrencies gave way to hotter AI and tech stocks. Oil ‘gushed higher’ Friday, with Brent Crude finishing above $117.00 a barrel, as the lingering Iranian war clouded peace efforts. Pump prices continued upward, as did diesel fuel, while natural gas reserves remained high.
Oil plunged Monday…Techs were active, dropping across-the-board. The blue-chip Dow Jones Industrial Average closed up 0.4% as it benefited from investor rotation, from software, technology and AI stocks to the ‘big board.’ The tech-heavy Nasdaq ‘took it on the chin’ off 1%, still reeling from the past week’s thrashing. The bread & butter S&P 500 slipped 0.5% also seeing pivoting from speculative tech issues to safer established stocks. Bitcoin fell below $77.000 a coin unable to gain an upward foothold as many cryptocurrency holders are opting out and into established steady-growth issues. Brent Crude fell from a lofty $112.00 a barrel to the $109.00 a barrel range, with West Texas Crude following down to the $97.00 a barrel range. Precious metals continued soft with gold hovering near $3,954.00 an ounce while silver dipped to the $52.00 an ounce range. The forgotten precious metal, platinum, heavily used industrially, traded lower, at $1,530 an ounce.
Indexes were all positive Tuesday with the Dow Jones Industrial Average picking up 187 points, while the S&P 500 added 27 points. The tech–heavy Nasdaq was up 0.8%, up 209 and leading the indexes. All eyes are focused on election day with much apprehension centered on which party will control Congress. The 10-year Treasury note yield hit 4.98%. “If you look at the bond market and the equity market of the past month or so, it’s clearly telling us that there’s a political pendulum shift that has happened for AI,” said Mark Hackett of Nationwide, chief market strategist. He added; “We are running with earnings growth in the 30% to 50% range right now, but the market isn’t being rewarded for that.”
Democrats sweep…taking both the House of Representatives and Senate by wide margins in Tuesday’s Mid-terms … .Indexes Wednesday were very strong, with the Dow Jones Industrial Average sky-rocketing up 1559 points, up 3%. The S&P 500 and Nasdaq followed, up significantly, 1.6% and 1.4% respectively. Blerine Uruci, Chief economist at T. Rowe Price, aptly quoted, “I wonder here if the market is interpreting the Democratic wave and victory as essentially the public saying, OK, this is not working.”
Thursday investors and traders gave back all of Wednesday’s gain…and more, with the Dow Jones Industrial Average plunging over 1,800 points. Both the S&P 500 and Nasdaq Composite followed, plummeting 4.3% and 5.5% respectively. Big technology, chips and Mag 7 stocks were blistered. Investor concerns overrode the market, as reality began to set-in.
RUMBLINGS ON THE STREET
Kevin Warsh, Federal Reserve Chair, WSJ – “Interest rates affect–directly, or indirectly–almost everything.”
Michael Monaghan, portfolio manager of the Founders 100ETF, WSJ – “If we can land the plane and get stability in the Middle East, this market is going to absolutely rip. There’s enough pie to go around for now. We’re bullish the AI trade isn’t over.”
EY–Parthenon, economist at Gregory Daco, WSJ – “The economy is robust, but it is also extremely concentrated. Yes the tide is rising, but it’s not lifting all boats this time.”
