By Kevin Kelleher
October 31, 2018

Now that U.S. stock exchanges have closed the books on what could be called Red October, it’s time to look at the winners and losers.

After several months of quietly sailing to new highs, U.S. stock indexes took a sudden fall in October. The Dow Jones Industrial Average closed down 6%. The S&P 500 Index fell 7%. The tech-heavy Nasdaq Composite was hit hardest, declining 9% in October. More stocks closed in the red than saw gains. Of the 500 stocks in the S&P, nearly 400 saw declines.

While the losers were more common than stocks that saw gains, there were some notable winners. The retail industry held up well, amid expectations for a strong holiday season. According to Deloitte Insights, 78% of shoppers surveyed plan this year to spend the same as or more than they spent a year ago. Retail sales are expected to rise more than 5%.

Walmart’s stock gained 7% during October, while Ross Stores rose 2% and Walgreens rose 10%. Many of these retailers cater to bargain-hunting consumers and could see a relative benefit if the economy slows down. One retailer that had a horrible month was Amazon, whose stock fell 20% during October and at one point had lost about $250 billion in value since its early September peak.

Other gainers included the telecom and consumer staples sectors, which are seen as safer than growth-oriented tech shares during market declines. Procter & Gamble rose 6% this month, while Keurig Dr. Pepper gained 13%. In telecom, Verizon rose 7% and Comcast advanced 8%.

A handful of tech companies performed well after reporting positive news that outweighed broader concerns. Tesla and Twitter gained 13% and 23%, respectively, on stronger-than-expected earnings. Red Hat, the best performing stock in the S&P 500, rose 29% after IBM offered to buy the software company.

Most other tech companies closed the volatile month down. Netflix declined 19%, Microsoft 6%, Alphabet 9%, Facebook 7% and Apple 3%. Along with Amazon, these stocks are counted as the leaders in the tech sector, but despite their continued growth, investors began to see them as too expensive.

Other widely held stocks declined, although not as much as some of the big tech names. Berkshire Hathaway, the holding company headed by Warren Buffett, fell 4%. Visa declined 8% while AT&T dropped 9%. Alibaba, a Chinese retailer traded on the NYSE, fell 14%.

There were too main factors behind the U.S. stock selloff. First, concerns about rising interest rates, which not only make borrowing more expensive for companies, but also make bonds more competitive investments to stocks. Investors are also worried about the impact of a trade war between the U.S. and China, which showed signs of escalating during the past month.

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