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What Happened to the Market in October?

By Matt Schreiber – WBI President and Chief Investment Strategist

It’s October and market volatility is back. It’s time for some clarity on the current market risk. We are constantly reviewing the market internals and have found a serious leadership problem going on in the S&P 500. Here is an overview of what’s going on as of last week, and market conditions since have not changed all that much.

Breaking Down the Market

As of 10/23, the S&P 500 is up 4.06% for the year. The top 3 sectors contributed more than all of the return:

  1. Information Technology – 3.15%

  2. Healthcare – 1.42%

  3. Consumer Discretionary – 0.99%

What’s meaningful here, and troubling, is that the top two sectors alone brought in more return than the rest of the S&P 500 Index Sectors. More evidence of thin leadership exists in the fact that:

  1. 281 S&P 500 companies had negative returns, 219 had positive returns

  2. 353 S&P 500 stocks were down 10% from their 52-week high, 179 stocks were down 20% from their 52-week high1

The FAANG stocks that have been fueling the market for about five years are now in tough shape. Through 10/23, Facebook, Amazon, Netflix, Google, are in correction territory and two are in bear market territory.

  1. Facebook is down 29%

  2. Amazon is down 13%

  3. Netflix is down 21%

  4. Google is down 13%

To make matters worse, the top three performing stocks — Apple, Amazon, and Microsoft — account for 75% of the S&P’s return this year. The top 10 stocks are now 116% of the return. That is insane! The index is a boneyard, will the rest of the holiday season ring in the next rally? More to come soon!

For more on this topic, listen to Bull | Bear Radio #49: S&P, We Have a Problem

Past performance does not guarantee future results. The views presented are those of Matt Schreiber and Don Schreiber, Jr. and should not be construed as investment advice. Matt Schreiber, Don Schreiber, or clients of WBI may own stock/sectors discussed in this article. All economic and performance information is historical and not indicative of future results. This is not an offer to buy or sell any security. No security or strategy, including those referred to directly or indirectly in this document, is suitable for all accounts or profitable all of the time and there is always the possibility of loss. Moreover, you should not assume that any discussion or information provided here serves as the receipt of, or as a substitute for, personalized investment advice from WBI or from any other investment professional. To the extent that you have any questions regarding the applicability of any specific issue discussed to your individual situation, please consult with WBI or the professional advisor of your choosing. This information is compiled from sources believed to be reliable, accuracy cannot be guaranteed. Information pertaining to WBI’s advisory operations, services, and fees is set forth in WBI’s disclosure statement in Part 2A of Form ADV, a copy of which is available upon request.

You are not permitted to publish, transmit, or otherwise reproduce this information, in whole or in part, in any format to any third party without the express written consent of WBI Investments, Inc.

Unless otherwise noted, data provided is from Bloomberg as of 10/23/18.

1 “Inside S&P 500, Most Stocks in Correction or Bear Market.” Yahoo! Finance, Yahoo!, 24 Oct. 2018


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Unless otherwise indicated all performance is sourced from Bloomberg.


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