Despite a late day swoon on Friday, the stock market managed its best month in four years with an 8% gain in October. The rebound from the late-August lows can be traced to a pick-up in merger activity and short-covering by traders that were getting margin calls as equities ticked up. Earning season has not been anything to write home about, but it hasn’t been a disaster either. Wall Street is still in a tizzy over the possibility of a rate hike this year with the Federal Reserve hinting once again of a move at the mid-December meeting. The odds are now about 50/50, and it would be nice if the Fed would ultimately come to some inevitable conclusion. The relentless changing course on a decision is creating havoc for equities both here and abroad. Unfortunately, dividend paying stocks – as those listed in the income portfolio – are taking the brunt of the waffling, through no fault of their own. For the week, the market was mainly directionless, except for some wide swings from takeover news. In play are Pfizer/Allergan, Walgreens/Rite Aid, and Duke Energy/Piedmont Natural Gas along with Hyatt, Starwood Hotels and Resorts Worldwide in the lodging space. Congress approved a two-year budget deal increasing spending by $80 billion through March, 2017, thus averting a debt default. The news sent defense stocks higher including aggressive choice Harris Corp., which was ahead by nearly 3½% on the week. However other industry sectors were all over the place with healthcare up by 3% on average followed by buyers in consumer service stocks offsetting losses in utilities and consumer staples, each off about 1%. There were also more declining stocks for the week than those advancing and less new 52-week highs and more yearly lows than the previous week. On Friday the Labor Department will report non-farm payrolls that are expected to increase by 200,000 as holiday-season hiring ramps up. Wednesday, we will see what QUALCOMM has to say about its fourth quarter with estimates of only $0.86 vs. $1.26 in last year’s final period. A negative cover story in this week’s Barron’s about QCOM and fellow chipmaker Intel will not help the bidding.
Here is the answer to last week’s trivia question: Which pizza chain is the largest by both total revenue and number of locations, world-wide? Domino’s, Little Caesars, Pizza Hut or Papa John’s. Answer: Yum Brands’ Pizza Hut chain with about 13,600 locations. Yum Brands, which also owns Taco Bell and KFC, does not break out its restaurant divisions’ revenues, but Pizza Hut takes in an estimated $5.5 billion in sales from its U.S. business, alone.
Today’s Trivia Question: The closely watched Consumer Price Index (or CPI) measures the change in the price of a market basket of consumer products and services in order to help measure the rate of inflation. The “Core CPI”, however excludes what two more “volatile” items? Food and Energy, Energy and Housing, Autos and Housing or Food and Utilities.