The past month has been one of the best this year. Here are the winners and losers, and a look at what might happen in November.
While inflation and interest rates grab headlines, October has been dominated by companies reporting results for the third quarter of their financial year. And it’s not just household names in the US that have grabbed headlines; high-profile UK stocks have put in some strong performances too.
Netflix (NASDAQ:NFLX) shares hit a record high following its results and electric vehicle giant Tesla (NASDAQ:TSLA) posted its highest ever quarterly profit, sparking a surge above $1,000 for the first time. In the month to 28 October, Tesla shares had risen 38.9%.
Elsewhere, carmaker Ford Motor (NYSE:F) jumped 19% and Microsoft (NASDAQ:MSFT) was up 15% in under a month. A week ahead of month-end, an above-average 83% of companies, including McDonald's (NYSE:MCD) and Google owner Alphabet (NASDAQ:GOOGL), had done better than expected and profits are beating expectations by greater margins.
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But there were losers too, among them chip giant Intel (NASDAQ:INTC), where quarterly sales were weaker than expected due to the industry-wide component shortages. Snap (NYSE:SNAP) struggled after the social media firm announced disappointing Q3 numbers and outlook for Q4. Facebook’s (NASDAQ:FB) results also failed to set the market alight.
Overall, US markets had a great October. The Nasdaq Composite tech index was up 6.9% for the month as at close of business on Thursday 28 October, the broader S&P 500 was up 6.7% and the more concentrated Dow Jones index was up almost 5.6%.
In comparison, UK stocks have lagged many international rivals. The FTSE 100, whose constituents derive over 70% of their revenue from overseas, did best, adding 2.3%. The more UK-focused FTSE 250 was up just 0.7% and the AIM All-Share index of typically smaller companies fell by 1.6%.
Better-than-expected third-quarter earnings and signs that companies are managing inflation pressures helped underpin most markets. Reckitt Benckiser (LSE:RKT) shares rallied after a sales upgrade, Unilever (LSE:ULVR) maintained its profit guidance, and bank sector results have been largely well-received, apart from lacklustre numbers from NatWest Group (LSE:NWG) at the end of the month.
A new draft relief, announced by Chancellor Rishi Sunak in Wednesday’s Budget, lowers the rate of duty on draught beer and cider, cutting the cost of a pint by 3p. Shares in JD Wetherspoon (LSE:JDW), Mitchells & Butlers (LSE:MAB) and Marston's (LSE:MARS) rose sharply in response.
What might happen in November?
After the long summer months, 1 November signals the beginning of the financial winter which stretches out to 30 April. This period encompasses some of the strongest periods of stock market performance and is, historically, the most profitable time of year to own equities.
To exploit this anomaly, we created Wild’s Winter Portfolios. You can read more about them here, and also find out which stocks make it into the two baskets of five shares this year by reading the article here.
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According to the Harriman Stock Market Almanac, the FTSE All-Share index has risen in 21 out of 37 years. However, it has fallen in 9 of the last 15 years, which includes two positive years in 2019 and 2020. Last year was especially strong – up 12.4% - coinciding as it did with the announcement of the first Covid vaccine.
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Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.