By Christine Idzelis and Mark DeCambre
U.S. stock benchmarks ended October at all-time peaks, booking weekly and monthly gains, even as investors digested disappointing results from heavyweights Amazon.com Inc. and Apple Inc. The S&P 500 and Nasdaq Composite indexes each saw their biggest monthly gains since November 2020, according to Dow Jones Market Data.
How did stock-market indexes trade?
The Dow Jones Industrial Average (DOW:DJIA) rose 89.08 points, or 0.3%, to close at a record 35,819.56.
The S&P 500 (S&P:SPX) advanced 8.96 points, or 0.2%, to finish at an all-time high of 4,605.38.
The Nasdaq Composite Index (NASDAQ:COMP) gained 50.27 points, or 0.3%, to end at a new peak of 15,498.39.
For the week, the Dow gained 0.4%, the S&P 500 rose 1.3% weekly and the Nasdaq Composite advanced 2.7%. For October, the Dow climbed 5.8%, while the S&P 500 jumped 6.9% and the Nasdaq gained 7.3%.
Year-to-date the Dow is up 17.03%., the S&P 500 up 22.61 % and the Nasdaq up 20.25%.
What drove the market?
U.S. stocks saw a strong finish to October.
The S&P 500 and Nasdaq had also closed at records on Thursday , lifted by earnings news and hopes for a congressional spending deal as investors shook off a disappointing third-quarter economic growth report, but downbeat results from two big technology companies weighed on Friday’s action.
Reporting late Thursday, Apple (NAS:AAPL) missed rev e nue expectations for the first time since late 2018 , amid slower-than-expected sales of iPhones and wearables. Amazon.com (NAS:AMZN) reported an earnings drop of nearly 50% and provided a disappointing holiday shopping forecast as it struggles with supply-chain and staffing issues. Amazon and Apple shares were both down more than 2% in early afternoon trading Friday.
“Apple is having an impact on the S&P and Nasdaq today,” Katie Nixon, chief investment officer of Northern Trust Wealth Management, said in a phone interview Friday. “It’s a big holding.”
The S&P and Nasdaq were trading down this morning, but edged into positive territory by early afternoon and finished the month and week with gains.
Microsoft MSFT, +2.24% overtook Apple as the most valuable U.S. company after the smartphone giant reported a rare sales miss in the face of supply constraints.
Nixon said that she remains “constructive” on equities as companies are fundamentally in good shape, with a majority beating expectations for third-quarter earnings so far. “The equities market is clearly embracing earnings season despite “notable misses” by Apple and Amazon, she said.
Investors may have underestimated “the flexibility of corporate America” to deal with supply-chain disruptions, Jack Janasiewicz, lead portfolio strategist at Natixis Investment Managers Solutions, told MarketWatch Friday. While shares of Apple and Amazon were trading down, he said “they’re actually holding up pretty well.”
Opinion: Apple and Amazon are struggling, so investors may want to look to these tech stocks instead
Traders have been factoring in expectations for tighter Federal Reserve monetary policy as debt yield curves flatten across the globe . Many expect the Fed will announce a plan next week for tapering its $120 billion in monthly bond purchases.
Read: Why U.S. stocks keep hitting records as yield curve flattens
Markets largely brushed aside European Central Bank President Christine Lagarde’s attempt on Thursday to push back against rising market expectations for policy interest rate increases by the end of next year.
In U.S. economic data, personal income slumped 1% in September after a 0.2% gain in the prior month, while consumer spending rose 0.6%. Economists were looking for a 0.4% decline in personal income and spending came in line with expectations.
The University of Michigan’s gauge of consumer sentiment rebounded slightly to a final October reading of 71.7 , up 0.3 points from the preliminary reading earlier this month, but below the final September level of 72.8.
“Growth is still humming along,” said Janasiewicz. “Coming into October, I thought the market was probably getting a little too bearish.”
Which companies were in focus?
Shares of Chevron Corp. (NYS:CVX) rose 1.2% after the energy giant reported third-quarter profit and revenue that soundly beat forecasts, on surging crude oil and natural gas prices.
Western Digital Corp. (NAS:WDC) was in focus after disappointing profit guidance from the disk-drive and flash memory chip group. Shares fell 8.7%.
Starbucks Corp. (NAS:SBUX) stock slid 6.3% after the coffee giant’s fourth-quarter sales growth slowed , falling short of the company and Wall Street’s expectations.
Shares of Meta Materials Inc. (NAS:MMAT) , a Nova Scotia-based material-science company, rose about 3.1%, after a 5% gain during Thursday’s session following Facebook Inc.’s announcement that it was changing its name to Meta.
Zendesk Inc. shares dropped 14.5% after the customer-service platform said it would buy Momentive Global Inc. , the parent company of online questionnaire platform SurveyMonkey in a $4.13 billion stock deal. Momentive Global shares slid 8%.
How did other assets trade?
The yield on the 10-year Treasury note TMUBMUSD10Y fell about 1 basis point Friday to 1.555%, after seeing its steepest daily drop since July 19 on Wednesday as front-end yields jumped, flattening the curve. Yields and debt prices move in opposite directions.
The ICE U.S. Dollar Index DXY, a measure of the currency against a basket of six major rivals, was up 0.8%.
Oil futures rose Friday, with the U.S. benchmark CL00 increasing 0.9% to $83.57 a barrel, but still seeing a weekly decline of 0.2%. Gold futures GC00 ended lower Friday, slipping 1% to settle at $1,783.90 an ounce for a weekly decline of 0.7%.
In European equities, the Stoxx Europe 600 (STOXX:XX:SXXP) closed 0.1% higher Friday for a weekly gain of 0.8% and rising 4.6% in October. London’s FTSE 100 (FTSE:UK:UKX) ended 0.2% lower Friday but was still up 0.5% for the week while advancing 2.1% this month.
The Shanghai Composite (SHG:CN:SHCOMP) rose 0.8% Friday but remained down 1% for the week and saw a 0.6% decline in October. The Hang Seng Index (HONG:HK:HSI) dropped 0.7% in Hong Kong on Friday, sliding 2.9% for the week but still up 3.3% for the month. Japan’s Nikkei 225 (NIKKEI:JP:NIK) rose 0.3% Friday for a 0.3% weekly gain, but remained down 1.9% for the month of October.
—Barbara Kollmeyer contributed to this report.