Stocks finished the month of October with another move higher as the Dow gained 241 points on light trading volume to end at 25,115. For the month of October, the Dow dropped 5%. Indicators are still negative but any good news on trade could push stocks higher plus companies are restarting share buy back programs that were suspended during earnings reports.
The Labor Department reported that wages over the past 12 months have risen 3.1% which is the fastest pace in 10 years. Wages and salaries were up 0.9% in October well ahead of estimates calling for a 0.5% increase. Benefits were up 0.4%. While higher wages affect company bottom lines it does boost consumer activity which makes up two thirds of all economic activity. These signs point to a robust Christmas shopping season and could be why consumer confidence is up as well as shares of retail stocks like Nordstrom’s and Macy’s.
General Motors reported good earnings with sales up 6% and net income up 42%. The company also announced it was offering voluntary buyouts to 18,000 salaried employees in an effort to cut costs in the face of rising commodity costs. My suggestion is that if they want more people to accept the buyout offer then throw in a Tesla Model 3 as part of the deal. GM’s sales were boosted by strong cross over and light truck sales in North America. Bottom line results benefitted from a good product mix, lower tax rates and cost controls. Going forward GM increased its guidance slightly. Hedge fund manager Silky Seamore was ecstatic over the results and hopes they will offset losses from his short bet on Tesla.
Facebook reported mixed results, but they were mixed in a good way as revenue was not as good as hoped for, but net income was much better than expected. The final tally showed revenue up 33% while net income gained 11%. Daily active users grew 9% yoy and mobile ad revenue increased as users continue to use more offerings like Instagram, WhatsApp and Messenger. Mark Zuckerberg, who is often referred to as the head of NSA, noted that revenue growth is slowing, and that Facebook is close to saturation in developed markets but has room to grow in emerging markets.