Wall Street delivered muted performance in October. The S&P 500 lost 0.09%, the Dow Jones retreated 1.3% past month (as of Oct. 31, 2024) and the Nasdaq dipped 0.4% in October (read: Nasdaq Hits All-Time High Ahead of Earnings: Will ETFs Soar Further?).
Upbeat earnings have helped the financial sector (as depicted by the 4% rise in the share price of the fund XLF. Tech earnings have also been moderately upbeat with some giants coming up with great results and some failing to impress investors.
Key Tech Earnings Results
As artificial intelligence (AI) and its rapid adoption have been ruling the latest U.S. market, the latest tech earnings deserve attention. Tesla stock TSLA, although down 1.6% in the past month, surged post earnings release on margin improvement and upbeat guidance. Netflix NFLX is up 6.3% in the past month on upbeat earnings and strong fundamentals (read: Should Netflix Replace Tesla in "Mag 7"? ETFs in Focus).
Facebook parent company Meta META announced its fiscal third-quarter earnings after the closing bell on Wednesday, beating analysts' expectations on the top and bottom lines. The company expects capital expenses to grow considerably in 2025.
Meta Platforms Inc. CEO Mark Zuckerberg cautioned investors that Meta will continue to spend significantly on infrastructure and other projects like the metaverse and AI-powered glasses. The META stock fell post earnings on heavy spending plans.
Meanwhile, some analysts believe that Microsoft MSFT stock will prove to be a long-term winner as Azure and AI scale up. Despite the strong performance, Microsoft's shares faced some downward pressure right after the earnings release due to Azure's growth aligning closely with the anticipated 33% increase. The guidance for Azure was slightly below market expectations, projected at 31-32% compared to the forecasted 32-33%.
On the other hand, Alphabet GOOGL came up with better-than-expected third-quarter earnings on Oct. 29 after market close. Cloud growth has acted as a tailwind. The surge in cloud revenues comes as rivals Microsoft and Amazon AMZN are also expected to expand their cloud businesses and boost investments in AI infrastructure (read: Google Soars on Upbeat Q3 Earnings: ETFs to Consider).
At Oct-end, Amazon.com reported third-quarter earnings that surpassed analyst estimates, driving its stock up 5.7% in after-hours trading despite issuing lower-than-expected guidance for the upcoming quarter. Amazon stressed on its continued investment in AI capabilities.
Apple AAPL beat earnings expectations. Its flagship iPhone line remains crucial, generating $46.22 billion, reflecting strong early demand for the iPhone 16. However, revenue from Mac and iPad divisions fell short of projections, indicating likely demand fluctuations in non-iPhone segments. Shares dropped 1.8% after hours on Oct. 31.
U.S. Economy Grows Faster Than Expected in Q3
The U.S. economy grew at a 2.8% annual pace in Q3 as consumer spending grew. Forecasters expected the country's gross domestic product — the total value of goods and services produced in the U.S. — to come in at 2.6% in the three-month period ended in September, according to a survey of economists by the data firm FactSet. The latest GDP figure is down slightly from the second quarter's growth of 3%.
Decent-to-Upbeat Jobs Report
The September jobs report offered hopes for U.S. markets. U.S. job gains showed the highest increase in six months, and the unemployment rate fell to 4.1%. Meanwhile, employers are expected to have hired 120,000 workers in October, a slower pace than September's 254,000 new jobs, according to FactSet, as quoted on CBSNews. Recent hurricanes and the East Coast port strike probably had a drag on the jobs growth.
Escalating Geopolitical Tensions
Tensions in the Middle East escalated in early October following an Iranian missile attack on Israel, spurring demand for safe-haven assets as investors grew anxious about the potential expansion of the conflict. At the end of the month, Israeli airstrikes were launched in retaliation. Among the targets that Israel appears to have hurt are Iran’s favorite Russia-made S-300 air defense systems, according to U.S. and Israeli officials.
ETFs in Focus
Against this backdrop, below we highlight a few winning exchange-traded funds (ETFs) of the past one month (as of Oct. 31, 2024).
AdvisorShares Psychedelics ETF (PSIL) – Up 61.6%
Due to the reverse stock split, the ETF PSIL saw a huge gains in price. Additionally, Mind Medicine stock that takes about 14.43% of the fund jumped about 11% in October. Cybin stock, which takes about 10.19% of the fund gained 11.5%. The ETF invests in drug companies designed for mental health.
Valkyrie Bitcoin Miners ETF (WGMI) – Up 18.7%
Bitcoin prices surged to the level of $73,000 in the month. The cryptocurrency soared due to political benefits, mainstream acceptance, rising wealth effect, protection against inflation and the start of the Fed’s rate-cutting cycle (read: 5 Factors to Bet on Bitcoin ETFs).
Simplify Interest Rate Hedge ETF (PFIX) – Up 20.9%
The benchmark U.S. treasury yields jumped to 4.29% on Oct. 30, 2024, from a 3.74% yield recorded at the start of the month. The annual inflation rate in the United States slowed for a sixth successive month to 2.4% in September 2024. This has lowered the chances of the next Fed rate cut in the near term, which in turn has boosted bond yields.
Range Nuclear Renaissance Index ETF (NUKZ) – Up 14.1%
The underlying Range Nuclear Renaissance Index tracks the performance of companies involved in the nuclear fuel and energy industry, particularly in the areas of advanced reactors; utilities; construction and services and fuel.
To keep up with the growing demand for artificial intelligence (AI) and address clean energy requirements, tech giants are turning to nuclear energy to power the energy-intensive data centers for training and operating the large-scale AI models used in today’s generative AI applications. This has boosted the demand for nuclear ETFs (read: Uranium ETFs Surge as Big Tech Powers Up With Nuclear Energy).
abrdn Physical Palladium Shares ETF (PALL) – Up 11.7%
The price of Palladium continued its upward trend in late October. It reached its highest level in more than 10 months. The U.S. government’s latest pledge to the G7 members to consider further ways to reduce Russian revenues in the metals space, including restrictions on Palladium exports, has probably boosted the price. The price increase is likely to have been aggravated by the covering of speculative short positions.
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