Perspective is Everything!

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Market Performance:

• Dow Jones Industrial Average: -0.86%
• S&P 500: -1.26%
• Nasdaq Composite: -1.53%

Economic Insights

While economic news was relatively quiet, the market experienced a challenging day on Friday, with all three indices closing lower. Pervasive pessimism stemming?from higher inflation, pushing Treasury yields up and, in turn, dragging stocks down. Geopolitical tensions are also weighing on the market.

Another concern is the expanding US fiscal deficit. The US deficit reached $1.7 trillion by the end of September, marking a 23% increase from the previous year. This surge has driven the total US debt to $33.6 trillion, and in a rising interest rate environment, it has led to ballooning US interest payments.

In short, the market is not in a favourable state.

News Worth Knowing

Amidst the current stock market negativity, it’s easy to lose focus and begin reacting to short-term volatility rather than adhering to long-term objectives.

The Wall Street Journal recently published an insightful article that delves into the viewpoints of five highly respected investors and where they are focussing their energy in this “higher for longer” environment. It’s always valuable to understand what seasoned investors are thinking. While it shouldn’t sway your thinking, it can help boost your confidence in your decisions, so we recommend reading the article.

Stocks Moving the Market

Friday’s market decline was driven by negative market sentiment, with Big Tech stocks trending downward.

Oracle (ORCL) significantly contributed to the downbeat day, with its share price declining by -6.0%. ORCL’s value fell after CEO Larry Ellison’s comments at an AI forum. JP Morgan responded that ORCL’s OCI could grow slower than anticipated, and they expect similar bottlenecks for Microsoft (MSFT) and Amazon (AMZN). MSFT closed Friday down -1.4% and AMZN fell -3.7% in response.

For investors in Solaredge Technologies (SEDG), Friday was painful when the company lost -27.3% of its value. SEDG announced an expected Q3 2023 loss as revenue could be 18% below initial company guidance due to lower European demand. Enphase Energy (ENPH) also had a challenging day, with its share price declining by –14.7%.

Investors are concerned that the lower solar demand is not limited to SEDG alone. Regional Banks are also in the middle of reporting earnings, and so far, the results have not met investor expectations. Regions Financial Corp (RF) reported Q3 2023 results on Friday that missed analyst expectations. RF’s share price declined by -12.4%.

This week, some of the Mega Cap stocks, such as Microsoft (MSFT), Alphabet (GOOGL), Meta Platforms (META)?and Amazon (AMZN), are reporting.

Earnings Season Highlights

During earnings season, we highlight the earnings from some better-known companies and give you a heads-up of which firms are reporting:

Reported Earnings: 20th October 2023

• American Express (AXP): Earnings per Share (EPS) beat analysts' estimates by +11.5%

Today's Expected Earnings: 23th October 2023

• None.

This is a condensed version of Lockstep's Daily Catchup Newsletter. For more details plus references to sources, sign up here and receive the full newsletter directly in your inbox.