Lawmakers argued over the U.S. debt ceiling this week
The month of October is already proving itself to be as volatile as September. The major indexes plummeted on Monday, as investors eyed inflation pressures and rotated out of tech due to a rising 10-year Treasury yield. Facebook (FB) in particular was in the hot seat, after a whistleblower accused the social media giant of a "betrayal of democracy," and the company experienced its worst service outage since 2008. The Dow bounced back on Tuesday to score a triple-digit win, however, with traders rushing back into the tech sector, as well as energy and reopening stocks. A Congress stalemate was also front and center, as lawmakers argued over whether or not the U.S. should raise the borrowing limit in order to prevent defaulting on the national debt.
Benchmarks sank into the red on Wednesday, before clawing back into the black to close out the session. Boosting sentiment was news that Senate Minority Leader Mitch McConnell agreed to a short-term extension of the U.S. debt ceiling to avoid a default and subsequent economic crisis. Investors were also celebrating a better-than-expected ADP employment report for September. Thursday brought more upbeat economic data, with weekly jobless claims coming in below Wall Street's estimates. Additionally, Senate Majority Leader Chuck Schumer confirmed lawmakers agreed to increase the debt ceiling, pushing the major indexes to their third-straight win. At last check, the three benchmarks remained on track for weekly wins, despite a dismal September jobs report.
Household Names Take the Spotlight
Several household names made headlines this week. General Motors (GM) bucked the broader-market selloff, after hedge fund Engine No. 1 took a stake in the company. And while CarMax (KMX) pulled back on the charts, the stock indicated this may be a short-lived trough. FB remained the talk of the town, bouncing back from its nearly 5% drop after the aforementioned whistleblower interview and and service outage. Elsewhere, PepsiCo (PEP) hiked its revenue guidance after posting a third-quarter earnings beat.
Blue chip IBM (IBM) was in focus, too, after it stood out as one of the
worst 25 stocks to own in October. Chipotle Mexican Grill (CMG) appeared on that
same list, despite its decent year-to-date performance. Tailwinds were blowing for HSBC (HSBC), however, following a
lofty upgrade from UBS "buy" from "neutral." Another social media giant attracting attention was Twitter (TWTR), which agreed to sell mobile ads company MoPub for
$1.05 billion in an all-cash deal.
Tech Sector Movers and Shakers
It was a busy week for the technology sector. Electric vehicle powerhouse Tesla (TSLA) attracted bullish analyst attention after posting record deliveries, and later announced it's moving headquarters from California to Texas. Marvell Technology (MRVL) appeared ready to brush off this week's sector selloff, after flashing a historically bullish signal. Semiconductor name Lam Research (LRCX) seemed like a great stock to buy on the dip, too, and stood out as one of October's 25 best performers. Seagate Technology (STX) was not as lucky, sinking on Morgan Stanley's criticism of rising inventory levels and more. Citrix Systems (CTXS) also pummeled, following a c-suite shakeup and downgrade from Citigroup.
Benchmarks Score Weekly Wins Despite Dismal Jobs Data
Earnings reports from multiple financial names will headline the second week of October, with the likes of Bank of America (BAC), Goldman Sachs (GS), and JP Morgan Chase all slated to step into the confessional. There will be plenty of
economic indicators for traders to unpack as well, including job openings, retail sales, and manufacturing data, the latest round of weekly jobless claims, the consumer price index (CPI), and the Federal Open Market Committee (FOMC) meeting minutes. Prepare for what is ahead by diving into what bulls should expect after the
September slide, and how stocks usually behave after a steep
S&P 500 pullback.