Thursday’s big three should keep investors busy, that is third-quarter U.S. growth data (just in and missed expectations), and Apple AAPL and Amazon AMZN earnings after the close.
And the European Central Bank is holding its meeting (policy was left unchanged), with central banks in focus after that O Canada surprise.
On its face, the fast-fading and historically volatile month of October looks to have been sweet for lots of investors. The S&P 500 SPX is set to gain 5%-plus, which would mark the best October return since 2011.
Does October offer up more opportunity than we realize? Perhaps so, says our call of the day from MacroTourist newsletter editor Kevin Muir, who highlights seemingly little known selling of “losers” by mutual fund portfolio managers late in the month.
As Muir explains via some broker pals in the know, all U.S. mutual funds must have an October year-end, and a settlement lag made Wednesday the last day for any transactions to be included in that 2021 tax year.
He notes that biotechs are among the stocks that seemed to be getting the chop, with the Nasdaq Biotech Index NBI up just 3% year to date — down 3% this month —- against the Nasdaq Composite’s COMP 18% gain.
But Muir also thinks those managers may be throwing out decent opportunities for others to catch. Here’s what he found after crunching some numbers on the iShares Biotechnology ETF IBB : “With an average return of 3.78% over the past two decades of Novembers, that’s a rather admirable performance record considering it also includes the usually brutal 2007/8,” says Muir.
What that kind of selling could do is help “create a seasonal tendency for this index to bottom into the end of the month when mutual funds flip their books to the next tax year,” he says, adding he’s going long on this under-the-radar trade that could be poised to rally next month.
Muir is on the lookout for other stocks tossed to the curb in the coming two months with other regular year-end shedding. VanEck Junior Gold Miners ETF GDXJ is down about 17%, as that sector has largely set out the broader market’s rally and Muir is ready to buy.
Weed MJ stocks, for that matter, have also been “left for dead,” notes Muir, who adds that as those stocks are mostly held in Canada, any tax effect might not show up until later.
Check out his full blog post here.
The buzz
Weekly jobless claims fell to a pandemic low of 281,000, while third-quarter gross domestic product data decelerated to 2%, falling short of expectations. Pending-home sales due after the bell.
Caterpillar CAT shares are getting lifted by an earnings beat and Merck MRK is up after a beat and forecast lift, while Stanley Black & Decker SWK is lower after its results. Mastercard MA and Yum Brands YUM is also rising on upbeat results, with Starbucks SBUX and Gilead Sciences GILD also coming late.
Among the companies that reported late Wednesday, Ford F shares are surging after the auto maker lifted guidance, resumed its dividend and said chip shortages are easing. eBay EBAY is dropping after an earnings beat, but disappointing forecast. Twilio TWLO stock is plunging, after the software company projected a deep holiday loss and said its chief operating officer is exiting.
GlobalFoundries will make its Nasdaq debut Thursday, under the ticker GFS, after the silicon wafer foundry priced its shares at the high end of its expected range — $47.
Uber UBER, DoorDash DASH, Lyft LYFT and Amazon could face billions in fines if they are found to have “misled” investors over potential earnings, a Federal Trade Commission official told MarketWatch.
A deal over President Joe Biden’s $1.75 trillion domestic bill is close, but tensions rose as a billionaires’ tax was scrapped, along with a paid family leave proposal.
Listen to the Best New Ideas In Money podcast.
The markets
Stocks DJIA SPX COMP have opened higher, with bond yields BX:TMUBMUSD10Y BX:TMUBMUSD02Y headed higher. Oil prices CL00 BRN00 are falling amid rising U.S. inventories and prospects of a return for Iran supply. European stocks XX:SXXP are lackluster as ECB President Christine Lagarde holds a press conference and naturally she’s talking about inflation.
Bitcoin BTCUSD remains under the $60,000 level, while meme coin Shiba Inu isn’t losing any momentum, vaulting 36% in 24 hours to a new high of $0.000073.
Read: World’s richest 29-year-old says biggest risk to crypto is ‘a cascade, combining a big crash, liquidations,’ and U.S. regulatory crackdown
Sign up for MarketWatch’s new crypto newsletter, Distributed Ledger, here.
The chart
More crypto in our chart of the day from the blogger behind The Market Ear, with this intro:
“Follow the money. Part of the ‘hottest’ money is to be found in bitcoin. Since the October melt up, SPX [S&P 500] and BTC have moved in tandem. The gap between SPX and BTC is becoming rather wide here. Watch this closely…”
Random reads
The latest in supply-chain worries: Spain may run out of booze by Christmas.
You’ll find actor B.J. Novak’s face on products worldwide. He has no idea why.
And a special good morning to the guy who did this:
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