The U.S. stock market closed October on a sour note, with the S&P 500 dropping 1.9% on the last day of the month, breaking its 29-day streak without a daily loss greater than 1%. While many view September as the toughest month for stocks, this year defied the trend as September saw gains, and October ended up being the rougher month. This serves as a reminder that statistical trends aren’t foolproof, and relying solely on predictions in investing can be unreliable over the long run.
The heavy influence of Big Tech on stock indices can pull the market up—or bring it down. The last week of October saw the release of Big Tech earnings, which were generally strong. However, Microsoft and Meta both issued guidance indicating slower revenue growth for the upcoming quarter, sparking concerns of an impending slowdown. Consequently, Big Tech stocks took a hit, with MSFT, NVDA, and META falling 6%, 5%, and 4%, respectively.
Apple (AAPL) Results
Apple reported earnings a day after Microsoft and Meta. A notable highlight was a surprising 6% year-over-year growth in iPhone sales, a reversal after two quarters of declines driven by sluggish demand and increased competition in China. Tim Cook noted that iPhone 16 sales outpaced iPhone 15. It could be a case for a wave of users upgrading after three to four years. As nearly half of Apple’s revenue comes from iPhone sales, this is a crucial trend.
Apple’s Services segment, the second-largest revenue contributor, continues to grow steadily, surpassing revenue from Mac, iPad, and Wearables combined. Nearly every Apple device generates Service revenue, providing a recurring revenue stream that differentiates it from other products, which are more cyclical and dependent on product launches and user replacement cycles.
Despite strong results, Apple shares dipped 1.86% in after-hours trading, dragged down by broader market sentiment.
Amazon (AMZN) Results
Amazon also reported earnings the same day as Apple. As hyperscalers ramp up Nvidia GPU-powered servers to capture AI demand, Amazon Web Services (AWS) has been a focal point. AWS didn’t disappoint, posting 19% year-over-year revenue growth. AWS remains the only Amazon segment seeing accelerated growth, as other areas have slowed.
Amazon’s capital expenditures have surged by 81% year-over-year, with CEO Andy Jassy signaling further increases in 2025. Investors were encouraged to see that this investment translated into robust revenue growth in AWS. Amazon shares jumped 6% in after-hours trading, standing out among the “Magnificent 7” stocks, all of which saw declines.
Why Is the Stock Market Coming Down?
Several factors could explain the recent drop.
GDP Concerns: The U.S. economy grew at 2.8% in the third quarter, missing the 3.1% forecast. U.S. stocks have been buoyed by strong economic growth and low unemployment, despite high interest rates. Yet, fears of a recession linger, and investors are especially sensitive to any slowdown signals. The third-quarter GDP miss reignited these concerns.
Rising Bond Yields Despite Fed Cuts: Bond yields have continued to rise even as the Fed cuts rates.
This can partly be attributed to overly optimistic market expectations for rate cuts, which initially factored in 0.5% reductions but have since been adjusted to a more modest 0.25%. Additionally, the growing U.S. debt burden means higher yields may be needed to offset the perceived risk of holding U.S. debt.
Another factor is election-driven fiscal expectations. Markets are anticipating increased deficits, especially if Trump wins, as his budget proposals could expand the deficit by $7.5 trillion—double that of the Harris proposal. This expectation is driving market adjustments.
Pre-Election Volatility: With the election just days away, market volatility is likely to remain elevated. Historically, the two weeks before polls see heightened uncertainty-driven volatility, which tends to subside post-election.
From a technical standpoint, the S&P 500 remains in an uptrend, holding above its 200-day moving average. This is no cause to abandon the bull run or make premature selling decisions. Rather than predict, it’s best to react to market movements. If the index falls below the moving average, we can reassess again.
