The Dow Jones Industrial Average ended October on a low point, marking its worst month since March as a broad sell-off saw all the major indexes close lower. Uncertainty over the upcoming presidential election between Donald Trump and Joe Biden is looming large.
A tough day for big tech stocks also played a major role in the rout. Apple (AAPL), Microsoft (MSFT), Facebook (FB) and Amazon (AMZN) all suffered a chastening day.
Trump vs. Biden Close In Crucial Areas
There could be a period of intense uncertainty if neither Joe Biden nor Donald Trump emerges as a clear victor. And if the Democrats take the House and Senate, major policy changes could affect the health care, energy, defense, construction, automotive and technology industries. While Biden leads, the race appears close in swing states, according to IBD/TIPP polling.
Even Commerce Department data showing an increase in spending by U.S. households in September failed to give the market a boost. Some economists fear high-income households drove the increase, with a large share of the population not partaking in the spending rise.
S&P 500, Nasdaq Struggle Again
Thursday’s rally melted away as the bears battered the bulls into submission Friday. The S&P 500 closed down 1.2%, rallying off session lows. The tech-heavy Nasdaq suffered even more, plunging by 2.5%, making it the worst-performing major index of the day. This move saw the index fall further below its 50-day moving average.
U.S. Stock Market Today Overview
Last Update: 4:10 PM ET 10/30/2020
Volume was mixed. It slipped just over 3% on the NYSE vs. Friday, according to early data. But trading rose more than 12% on the Nasdaq. CAN SLIM investors prefer for volume to be lower on a down day.
Small caps were also battered down amid the widespread losses. The Russell 2000 closed down by 2%.
Most sectors were negative after Thursday’s rally proved short-lived. Consumer discretionary, technology and communication services suffered the worst losses. The Vanguard Consumer Discretionary Index ETF (VCR) fell 3.4%.
The Innovator IBD 50 ETF (FFTY) also felt the pain, dropping by 3.3%. There was just one winner on the IBD 50, with Franco Nevada (FNV) up 2.1%. Heavy losers included Meridian Bioscience (VIVO), which ceded 12%, and Digital Turbine (APPS), which lost 12.4%.
Rotten Apple Stock Sours Dow Jones
The Dow Jones Industrial Average managed a late rally, but still closed down 0.6%. It was its worst week and month since March.
The index bled red, with more losers than winners. Apple was the biggest loser, slipping by 5.8%. The iPhone maker reported fiscal Q4 results that beat analysts’ estimates late Thursday. However, investors were spooked by a big revenue dip in China, where sales fell 29% to $7.95 billion.
Other big losers included Boeing (BA), which lost 3.1%, and Salesforce.com (CRM), which surrendered 2.5%.
Dow component stocks making gains included IBM (IBM), which gained 2.6%; Caterpillar (CAT), which was up 1.5%; and Walgreens Boots Alliance (WBA), which rose 1.5%
These FANG Stocks Bitten
It was a tough day for FANG stocks, despite encouraging earnings.
Amazon fell 5.5% in above-average volume even though the internet giant announced better-than-expected Q3 results. The e-commerce firm saw EPS jump 192% to $12.37 per share on $96.1 billion in revenue. Analysts expected earnings would rise 77% to $7.48 a share on revenue of $92 billion.
Amazon has formed a cup with handle with a 3,496.34 buy point. It has a perfect Composite Rating of 99.
Facebook fell 6.3% despite serving up Q3 results that easily topped expectations. Facebook stock is forming a cup-with-handle base with a 285.34 entry. It fell below its 50-day line in Friday’s sell-off.
But Alphabet (GOOGL) rose 3.8% after Q3 earnings spanked analyst estimates. EPS rose 62% from a year earlier to $16.40. Revenue was up 14%.
Alphabet stock made an aggressive gap-up, and its relative strength line has just hit a fresh high. Alphabet stock has formed a cup base with a 1,726.20 buy point. It has a strong IBD Composite Rating of 90
Stock Market Losers Outnumber Winners
The market saw a number of stocks making big price moves on unusually heavy volume, but there were more losers than winners.
Winners included Zendesk (ZEN), which rose 4.5% but failed to hold above a buy point; Charter Communications (CHRT), which rose 4.9%; and Tempur Sealy (TPX), which rose 2.9%.
Losers included Twitter (TWTR), which plunged 21.5% on disappointing results; Columbia Sportswear (COLM), which gave up 22.5%; and Fortinet (FTNT), which lost 6.8%.
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more on growth stocks and analysis.
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