By Barbara Kollmeyer
Thursday’s big three should keep investors busy, that is third-quarter U.S. growth data (just in and missed expectations), and Apple /zigman2/quotes/202934861/composite AAPL +2.62% and Amazon /zigman2/quotes/210331248/composite AMZN +3.53% earnings after the close .
And the European Central Bank is holding its meeting (policy was left unchanged), with central banks in focus after that O Canada surprise.
On its face, the fast-fading and historically volatile month of October looks to have been sweet for lots of investors. The S&P 500 /zigman2/quotes/210599714/realtime SPX +2.13% is set to gain 5%-plus, which would mark the best October return since 2011.
Does October offer up more opportunity than we realize? Perhaps so, says our call of the day from MacroTourist newsletter editor Kevin Muir, who highlights seemingly little known selling of “losers” by mutual fund portfolio managers late in the month.
As Muir explains via some broker pals in the know, all U.S. mutual funds must have an October year-end, and a settlement lag made Wednesday the last day for any transactions to be included in that 2021 tax year.
He notes that biotechs are among the stocks that seemed to be getting the chop, with the Nasdaq Biotech Index /zigman2/quotes/210598353/realtime NBI +2.20% up just 3% year to date — down 3% this month —- against the Nasdaq Composite’s /zigman2/quotes/210598365/realtime COMP +2.89% 18% gain.
But Muir also thinks those managers may be throwing out decent opportunities for others to catch. Here’s what he found after crunching some numbers on the iShares Biotechnology ETF /zigman2/quotes/206189322/composite IBB +2.41% : “With an average return of 3.78% over the past two decades of Novembers, that’s a rather admirable performance record considering it also includes the usually brutal 2007/8,” says Muir.
What that kind of selling could do is help “create a seasonal tendency for this index to bottom into the end of the month when mutual funds flip their books to the next tax year,” he says, adding he’s going long on this under-the-radar trade that could be poised to rally next month.
Muir is on the lookout for other stocks tossed to the curb in the coming two months with other regular year-end shedding. VanEck Junior Gold Miners ETF /zigman2/quotes/204075079/composite GDXJ +0.12% is down about 17%, as that sector has largely set out the broader market’s rally and Muir is ready to buy.
Weed /zigman2/quotes/204332491/composite MJ +4.00% stocks, for that matter, have also been “left for dead,” notes Muir, who adds that as those stocks are mostly held in Canada, any tax effect might not show up until later.
Check out his full blog post here .
Weekly jobless claims fell to a pandemic low of 281,000, while third-quarter gross domestic product data decelerated to 2% , falling short of expectations. Pending-home sales due after the bell.
Caterpillar /zigman2/quotes/203434128/composite CAT +2.52% shares are getting lifted by an earnings beat and Merck /zigman2/quotes/209956077/composite MRK -0.37% is up after a beat and forecast lift , while Stanley Black & Decker /zigman2/quotes/206369278/composite SWK +3.52% is lower after its results. Mastercard /zigman2/quotes/207581792/composite MA +1.97% and Yum Brands /zigman2/quotes/209029767/composite YUM +1.92% is also rising on upbeat results , with Starbucks /zigman2/quotes/207508890/composite SBUX +1.96% and Gilead Sciences /zigman2/quotes/210293917/composite GILD +1.84% also coming late.
Among the companies that reported late Wednesday, Ford /zigman2/quotes/208911460/composite F +3.06% shares are surging after the auto maker lifted guidance , resumed its dividend and said chip shortages are easing. eBay /zigman2/quotes/204653455/composite EBAY +1.04% is dropping after an earnings beat, but disappointing forecast . Twilio /zigman2/quotes/205796518/composite TWLO +6.12% stock is plunging, after the software company projected a deep holiday loss and said its chief operating officer is exiting.
GlobalFoundries will make its Nasdaq debut Thursday, under the ticker GFS, after the silicon wafer foundry priced its shares at the high end of its expected range — $47.
Uber /zigman2/quotes/211348248/composite UBER +5.60% , DoorDash /zigman2/quotes/222973991/composite DASH +10.37% , Lyft /zigman2/quotes/208999293/composite LYFT +3.91% and Amazon could face billions in fines if they are found to have “misled” investors over potential earnings, a Federal Trade Commission official told MarketWatch .