The DC Today - Monday October 31, 2022
The Dividend Cafe
The Dividend Cafe - The Bahnsen Group
4.9 • 572 Ratings
🗓️ 31 October 2022
⏱️ 13 minutes
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Summary
Futures opened basically dead flat last night and stayed there into the evening. Bright and early this morning futures pointed to a down -100 point open pre-market and it worsened from there.
The market opened down -100 points or so and didn’t move much above or below that throughout the day. The Dow closed down -128 points (-0.39%) with the S&P 500 down -0.75% and the Nasdaq down -1.03%.
The Dow hit 28,661 at one point October 13, it closed as low as 29,203 on October 10, and yet today sits at 32,732, up +14% from mid-month lows. We are a bit over half way through earnings season (263/500 companies reporting) and sales growth is +10.3% year-over-year (a bit ahead of expectations and earnings growth is +4.2% (a bit behind expectations). Excluding the energy sector, though, earnings growth in the S&P 500 is negative year-over-year. Right now consensus expectations are for $235 of earnings from the S&P 500 in calendar year 2023. The number was $250 in the summer, so it has come down, but really not very much. Operating margins have declined from about 17% plus change to 16% plus change. For the third time this year we have a spike of breadth where the % of companies advancing over a 10-day period is in the 99th percentile (it also happened in January and July). In those other two occasions the momentum was not sustained. As good as things have been the last few weeks, only 40% of companies are above their 200-day moving average. And in some sectors the breadth of companies seeing price improvement is really, really low.
Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com
Transcript
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| 0:00.0 | Welcome to the DC Today, your daily market synopsis of the Dividing Cafe, brought to you every Monday through Thursday to bring you up-to-date information and perspective on financial markets. |
| 0:15.1 | Well, hello and welcome to the Monday edition of the DC Today. I am now recording with the month of October in the |
| 0:22.6 | books. We are done and it is Monday, October 31. And as a matter of fact, the month of |
| 0:30.7 | October ended up being the biggest month up for the stock market since 1976 and the biggest October for the Dow ever. |
| 0:43.8 | So you had a just nasty second and third quarter and then you had a big rally back in |
| 0:49.5 | October. Some of it was helped by coincidence of timing that things really rallied, excuse me, really accelerated to the downside in late September. |
| 1:00.0 | But, you know what, actually, the number at which the Dow bottomed wasn't right away in October. |
| 1:06.5 | On October 13th, intraday, the Dow was as low as 28,661. |
| 1:16.3 | It's closing low was the Friday before that, the 10th, which was 29,200. |
| 1:22.9 | But we closed today at 32.732. |
| 1:26.0 | So 32, 700. |
| 1:27.6 | We had been at 28600.32. So 32-700. We had been at 28600. |
| 1:30.2 | So you're talking about a 14% move higher from the middle of the month, |
| 1:36.4 | really quite significant rally in markets. |
| 1:39.2 | I'm using the Dow here as Bellwether, |
| 1:41.3 | and I've talked about a lot in the past why that is. |
| 1:44.6 | Those numbers would not be as good with the NASDAQ, not even close. |
| 1:49.1 | The S&P for the month of October was up about 7.9% or so, really held down by the high |
| 1:55.1 | cap weightings and some of the big tech stocks that got hit. |
| 1:59.1 | So sometimes that construction, that methodology, that criteria, |
| 2:03.7 | sometimes it really helps. And other times it can hurt. That's the way cap-weighted indexes |
| 2:09.2 | work. But on the day-to-day, rather than just recap all of October, the futures last night were really quite flat and stayed there through the |
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