*Currency markets and Bitcoin trade 24 hours, the figures here indicate movements between 9am and 4pm ET #1 Rally fires up stocks, pares some October losses
U.S. markets roared back today after several days of painful sell-offs. More buyers than sellers since there was no major economic or corporate news to roil investors. The rally intensified in the last hour of trading just as it has done so to the downside the past few sessions. Volatility is in the driver's seat… we are just along for the ride.
There is one more day left in what has been a brutal October for stocks.. so let's take stock:
DJIA: -6.5% in October - worst performance since Aug 2015
S&P 500: -8.3% in October - worst performance since May 2010
Nasdaq: -11.5% in October - worst performance since Oct 2008
Red October has severely clipped the wings and the stock prices of some of the largest mega-cap companies in the S&P 100. Zoom into this image to see the carnage that has taken place with companies like Amazon, Nvidia, IBM, Caterpillar and Occidental Petroleum, among others. They are all down close to 20 percent or more for the month - and they represent a wide swath of the market, not just technology.
 Charts courtesy of Koyfin Charts And then there is GE. Shares of former blue chip industrial giant traded below $10 today as the company announced it will cut its treasured dividend to 1 penny per share. Our chart of the day, below, tells the tale.
Why it Matters: Statistics like 'worst performance since ____', don't actually matter to us in the midst of a market sell-off and head spinning volatility. They do, however, help us keep things in perspective as we look at staggering day to day losses that eat into our portfolios. The markets are resilient and investors have experienced much more pain in the last decade, even in the midst of a one of the longest bull markets on record. As we keep reminding you, the amount of UP days versus DOWN days is nearly the same, it's just that the UP days are higher, on average, than the DOWN days. You have to be able to stomach the drawdowns if you want to be invested in stocks. It's not for everyone, and there are alternatives. Never forget that.
What's Next: We are in the late innings of earnings season, and it has been anything but a catalyst for stocks to keep grinding higher. The results have been good, generally speaking, but investors needed better than good to get excited given the anxiety around rising interest rates, a flattening yield-curve, a potential slow-down in economic growth and a tariff war. This quarter may be as good as it gets for awhile on the earnings front as the wind of tax cuts fades behind us. As Schwab's Liz Ann Sonders tells us, "Comps for next quarter and next year, for that matter, are going to be significantly lower, and not everyone has priced that in." In other words, we need to adjust our expectations.
Read More:
How The Fed Could Kill The Bull Market
Why Microsoft's Stock Is Breaking Down
Facebook Shares Stung By Slow User, Sales Growth
#2 Apple's Unveiling
Apple unveiled some new iPad models and a new MacBook Air, among other products at an event in Brooklyn, NY today. No company does a better job of designing, packaging and marketing products better than Apple, in my opinion. You may not be an Apple user, investor or a fan, but you have to admire the company's ability to merchandise its revolutionary products. Did the world need a new iPad? No… but Apple calls it 'revolutionary piece of glass that can be anything you want it to be." Full disclosure: We weren't at the event, so take a look at the Washington Post's coverage for more details.
Why it Matters: Apple is also masterful at timing. It's not even Halloween, but they have the holiday spirit timed perfectly as the shopping season seems to start earlier and earlier every year. The fourth quarter is traditionally strong for Apple and its competitors, and new product roll-outs (outside of the iPhone) always help boost sales when they are needed most. The 2 iPads Apple rolled out today are priced below $400, which seems affordable given how expensive most of its other products are.
What's Next? Apple has begun already started selling its new iPhone models, the XS, MS Max and the XR. The company will report earnings on Thursday, Nov 1. We may get an early read on how sales and pre-orders look for those phones, which should provide some visibility into the holiday season. Shares of AAPL have fallen about 7 percent this month,but are up 26.5 percent in the past 6 months. While its fellow FAANGs have suffered far worse fates, Apple has held up reasonably well in the October fires, and its strongest season is coming right up.
Read More:
Apple Unveils New Mac Computers at New York Event
The Economics of an iPhone Chart of the Day- GE dividends slashed by over 90%
It's hard to believe that such a fabled American conglomerate as General Electric has stumbled to such lows. Tuesday was a particularly bad day for GE, as its stock plunged by more than 10% to a new nine-year low below $10 per share.
This extension of the recent sell-off occurred after the company announced on Tuesday morning that it would be slashing its once-prized quarterly dividend payout by over 90% to $0.01 per share, beginning in 2019. The 2018 quarterly dividend had already been cut in half to $0.12 from 2017's $0.24. General Electric stands to save close to $4 billion annually as a result of this dividend cut. The troubled company has been hit particularly hard by the underperformance of its struggling power business, which it has announced will be split into two units.
The chart below shows the steady historical rise of GE's annual dividend payout, with increases occurring almost every year since the late 1970s up to its height at $1.24 per share annually in 2008, when the financial crisis hit. From there, the dividend dropped sharply but then began to rise again in 2011. The next sharp drop occurred, as noted, in 2018, when the dividend was cut in half. And with the annual payout slated to fall dramatically to $0.04 annually in 2019, GE dividends will not have seen such low levels since 1977. Given that many shareholders have historically held GE stock primarily for its quarterly payouts, it comes as no surprise that the stock is now being dumped – the proverbial goose has simply stopped laying golden eggs.  Enjoy the Market Sum? Share it with a friend. CONNECT WITH INVESTOPEDIA |
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