Stock market outlook, October 31

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Mercifully, October is drawing to a close.

On Wednesday, investors will be greeted by the final trading day of what’s been the market’s worst months during the post-crisis bull run. And as The Financial Times noted Tuesday, the S&P 500 has dropped 16 of 22 trading days in October so far, putting it on track to see the highest percentage of losing sessions since 2000.

Through Tuesday’s close, the Dow was 4.9% this month, the S&P 500 was off 5.5%, and the tech-heavy Nasdaq was down over 6.5%.

On Tuesday, markets got a bounce — and though it looked for a bit like we might get a repeat of Monday’s trading action — investors followed-through and stocks closed right at their highs of the day. The Dow on Tuesday gained 431 points, or 1.7%, the S&P 500 rose 41 points, or 1.5%, and the Nasdaq rose 111 points, or 1.6%. The small-cap Russell 2000 was the leader on the pack, rising just a hair under 2%.

Markets on Wednesday could take their direction from shares of Facebook (FB), with the company’s third quarter earnings report released after the market close on Tuesday showing the company beat on earnings per share but came in a bit light on revenue. In after hours trading shares were trading up as much as 4.5%.

In the third quarter, Facebook reported daily active users that slightly missed expectations, with daily active user growth in its more lucrative markets of the US & Canada flat and Europe seeing a slight decline from the prior quarter. The company has now had 185 million daily active users in the US & Canada for three-straight quarters.

Facebook shares were slightly higher after the company reported earnings Tuesday afternoon. The stock will be critical for markets on Wednesday as tech stocks have taken a big bite out of the market during the month of October. (AP Photo/Marcio Jose Sanchez, File)

On Wednesday, the earnings schedule remains busy with General Motors (GM), Kellogg (K), Yum Brands (YUM), and AIG (AIG) among the notable companies set to report results. 

And on the economic data side, the flow of labor market data for the month of October will begin when ADP releases its report on private payroll growth in October in the morning, which is expected to show 190,000 jobs were created in the private sector this month.

The third quarter reading on employment costs, an alternative measure of wage growth that includes non-wage compensation, as well as the October Chicago PMI report will also be released.

Myles Udland is a writer at Yahoo Finance. Follow him on Twitter @MylesUdland

2018-10-30 22:53:11

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