Market Recap: Friday, October 30

All three major indices closed in the red on Friday with the DOW seeing its worth month since March, led by a sell off in the technology sector and worries about increasing coronavirus cases. The Final Round panel discusses the latest.

Video transcript

SEANA SMITH: Welcome back to "The Final Round" here on Yahoo Finance. I'm Seana Smith. As we wrap up the trading week and the month, taking a look at a selloff here, with all three of the major averages well in the red, although we are off the lows of the day. The Dow off just around 174 points, the S&P off just over 1%.

The NASDAQ has been hit hardest for the entire trading day. The NASDAQ off just around 2 and 1/2%. We were looking at losses of 3% not too long ago. A lot of that has to do with the selling that we're seeing in some of those big tech names. Taking a look at Apple and Facebook and Amazon, all three of those names under tremendous amount of pressure.

[BELL]

And that does it for us today. Taking a look at where things settle down, S&P and NASDAQ all firmly in the red on a weekly basis. We're looking at the worst week for the major averages since March. On a monthly basis, this is the second month in a row that we're seeing declines here for stocks.

And taking a look at the Dow specifically, it's the worst month for the Dow since March that we've seen a lot of the selling action for most of the past couple of weeks. In terms of what's triggering the selling action today, a lot of that has to do with what we're seeing in big tech.

Three out of those four tech giants that we talked about yesterday that reported after the bell are moving lower today. Taking a look at Apple, that stock off just around 6%, Facebook also off around 6%. Amazon is also in the red. Google, it was a standout yesterday. It's the only one of those four names ending to the upside.

We talked about it going into these reports, but the bar was set very high, very little room for disappointment. And that's a big reason why we're seeing so many of those names under pressure today. Taking a look at the sector action, we're seeing that reflected in the sector action today. Technology, communications services, consumer discretionary, the worst performers today. All 11 of the S&P sectors are in the red.

And then, of course, more broadly speaking, it's not just because of these earnings that we're seeing so much of the selling recently. Also investors are closely watching that rise in coronavirus case count throughout the country and also over in Europe. We also don't have a stimulus package and the possibility of a contested election. All of those factors here weighing on the markets over the last couple of weeks.

I'm joined by my co-host Myles Udland. We also have Akiko Fujita, Jared Blikre, and Rick Newman here joining the conversation for the next 30 minutes. And Myles, I'll just kick it over to you first because we're wrapping up what has been a pretty volatile month for stocks.

The Dow closing in the red for the month, as well as S&P and the NASDAQ. I mean, when you take a look at the losses today, just really highlights how much is riding on these earnings reports and how high the bar has been set going into these results.

MYLES UDLAND: Yeah, you know, it's gratifying. Not that we make predictions here at Yahoo Finance, but it's gratifying when I wrote in the Morning Brief, I think about nine days ago, that some data that we had looked at from Bespoke Investment Group, that that data suggested that companies weren't being rewarded for earnings beats. And here we are, nine days later, and we see all of these major companies reporting earnings beats. And with the exception of Alphabet, they all get punished for that.

And so this is certainly a material trend here that-- I mean, I guess there is plenty of earnings to go. These are the major highlights. It's one that investors will probably have to contend with, even as we get through the election. And it certainly will be a big part of the story as we get into the beginning of next year.

But really, what we're all thinking about now is what happens on Tuesday. And my favorite market stat-- and we can take it or leave it, whether it really matters, but is that if the S&P goes down from three months before the election to election day, that means the party in power flips. It's been that way every election since 1984. It's worked in every election, except for three, going back to 1928.

And I'm just looking at Yahoo Finance historical data here. The market closed on August the 3rd at 32.94. This is the S&P. Today, it closed at 32.70. So we'll see what happens over the next couple of sessions. It might mean something. It might mean nothing. But this is what our limited grasp of market history has told us is likely to happen. Essentially, this would suggest that Joe Biden is probably going to win on Tuesday.

SEANA SMITH: We'll see. We'll see if we can count on that. I don't know. 2020 has certainly thrown us a lot of curveballs, so--

MYLES UDLAND: I didn't make the rules. It's just some data mining. It's just what we have.

SEANA SMITH: Well, we like it. We always like a couple of good election facts. So it's a good way to wrap up the week. Jared, I just want to get your take just on what we've seen play out not only this week, but for the month of October. We've seen volatility really re-enter this space here, lots of uncertainty just in terms of what's going to happen on November 3. What do you make of the recent action that we've seen?

JARED BLIKRE: Well, the recent action, let's start with today. We had those big tech earnings, and it's also end of month. We could have seen some repositioning. We'll take a look at the bond market in a second because I think that has something to do with it, too, some really interesting things going on there.

But a lot of it just has to do with the heading into the election, also dealing with all these reclosings. We talked about Belgium reclosing. It looks like Germany might do something along those lines. And so if we take a look at the Dow here, this is the worst performer of the majors for the month, down 4.6%. NASDAQ off 2.3%, S&P 500 off a little bit more, 2.76%.

But I want to take a longer term look here. And, you know, at the beginning of the week, or I think it was one week ago, we were still talking about this potential cup and handle pattern. I guess that was two weeks ago maybe. But that really fell apart. And now what we have is a potential double top.

And so, at 32.50 is really turning out and 3,300 a kind of a big support area. So if this doesn't hold, we could have further downside, especially if there is a contested election next week.

So let's take a look at the bond market. Here's a 10-year T-note yield. We can see really picked up in October. We have this August bottom down here. And in the last two days alone, we've tacked on probably 8, 9 basis points for the month of October 18.

Now, we did get a lot of economic reports, and I'll say that we haven't been seeing the rise in bond yields being reflected in the breakevens or the inflation expectation. This is real yields. And when rates head higher, that drags on these big cap names that we've been looking at that reported earnings yesterday. So that's another source of some consternation here.

Then throw in the dollar and some fluctuations there. It's all interconnected, and it's all complicated, but here are the results. Let's take a look because we looked at this for long enough today. Let's take a look at our sectors here over the week.

And we can see that utilities down 3.6%. That was the best performing sector. And discretionary, that's an Amazon play, along with some others. You look at a ETF like IBUY, really a difficult couple of days here. So discretionary is down 6 and 1/2%.

And then if we go to the month to date, the only thing in the green again is utilities. A bit non-intuitive because they're competing with bonds for yields. You would have thought they'd been down, but maybe some M&A activity and some other things related to the COVID crisis explain that.

Bottom line to the downside, we see tech is the biggest, followed here down 5%, followed by energy and healthcare. Worth noting, too, that crude oil just is having its worst week in about three or four months here. So lots being reflected not only in the election trade and the uncertainty around that, but also the global lockdowns that we're seeing.