The big news from Wall Street right at the end of October wasn’t the rebound from September’s weakness, it was the way Apple gave up the title as most valuable company in the world to the slow and steady Microsoft.
October turned out to be the best month all year (September was the worst with a 4.8% loss), despite all those fears about Covid Delta, political uncertainty in the US about the Biden budget, inflation and a tightening of monetary policy, rising wages, the Chinese economy and property developers going bad, supply chain problems and shortages across the economy and globe, especially of computer chips.
For all that and the mixed results from the remaining megatechs (especially Amazon and Apple) there were more new highs for the S&P 500 and Nasdaq on Friday in a week of records.
Friday saw the Dow end up 89.08 points, or 0.3%, to close at 35,819.56, just shy of a new high. The S&P 500 edged up 8.96 points, or 0.2%, to finish at an all-time high of 4,605.38 and the Nasdaq added 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 jumped 2.7%, despite the weak results from Amazon and the problems around Facebook and the Apple’s misses.
For October, the Dow climbed 5.8%, while the S&P 500 jumped 6.9% and the Nasdaq gained 7.3%. September’s loss erased and added to!
In Australia the ASX 200 is looking at a strong start today (Monday) with the futures trading adding 68 points by the close early Saturday, Sydney time. Watch for the important Westpac results before the opening this morning.
The ASX rose 1.4% on Friday for a 1.2% loss for the week which was the first losing week in a month. The ASX 200 finished down a handful of points at 7323.7 on Friday compared to the September 30 close of 7,332.2. But that was better than September’s 2.6% drop.
On Wall Street Friday’s records came after a week of mixed earnings performances from megatechs with Amazon definitely the under-performer in the eyes of investors – both actual and prospectively into the rest of the year.
Apple also disappointed even though the numbers were still astounding – a net profit of more than $US94 billion for the year to September was still an astonishing figure. But the iPhone giant missed on market forecasts for revenues and a couple of other measurers and the shares slipped.
Microsoft overtook Apple as the largest market capitalisation on Wall Street. This is not the first time this has happened and came at the end of the week where Microsoft impressed with its solid result and Apple lost ground because it did poorly (but still well) against expectations. Amazon just undershot forecasts and its outlook for the current quarter was also disappointing.
Apple fell 1.8% on Friday after reporting fourth-quarter revenue that came in below the average analyst estimate, which gave the iPhone maker a market value of $US2.46 trillion. Microsoft rose 2.2% to hit a market value of $US2.49 trillion.
For the week Microsoft was up more than 7%, Apple edged up 0.75%. For the month, Microsoft surged more than 14%, Apple by 5%. For the year to date, Microsoft shares are up more than 49%, Apple by nearly 13% but that is well short of the 22% plus for the S&P 500.
At the same time, Tesla entered the very select club of companies that weigh more than $US1 trillion, thanks to two very positive signals: a huge 100,000-unit order from Hertz for its rental fleet and the record sales of the Model 3 in Europe last month, plus record overall sales in the September quarter.
Tesla shares rose 3.3% on Friday to end the week valued at $US1.08 trillion. For the week the shares were up a hard to believe 22.4% (a huge rise for such a high value stock) and nearly 44% for the month and are up nearly 58% year to date.
It is hard to see that being repeated in 2022 – but the company has surprised all year, especially in the past three months or so.
These big rises by the likes of Microsoft and Tesla have come despite all that speculation about the impact of high inflation (which is proving more persistent than thought earlier in the year), a growing acceptance of the start to the end of the Fed’s quantitative easing and then interest rate rises next year.
Tesla is widely tipped as a leading ‘victim’ when rates start rising, but it has ridden out all the speculation this year and surged higher.
One factor positive for Tesla has been higher oil prices – they do not affect it or its customers. US futures are up nearly 72% so far this year and Tesla’s shares have ignored that impact.
Besides the S&P 500’s 1.3%, eurozone shares rose 0.9% and more than 4.5% for the month, outperforming the S&P 500 and the Dow. Japanese shares rose 1.28% (and 0.4% for the month). But Chinese shares fell 0.65% for the CSI 300 and 0.4% for the month.
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At Friday’s close, CEO Elon Musk’s 23% stake in Tesla was worth nearly $US260 billion.
So far he’s holding on, but not so a current and a former director.
Director Ira Ehrenpreis sold more than $US200 million Tesla shares on Wednesday, after the stock crossed the $US1,000 mark for the first time last Monday, according to SEC filings.
Antonio Gracias, a former Tesla board member whose term ended in October, also filed the planned sale of $US610 million worth of shares on the same day.
