After a concerted sell-off last month, stocks started October on the front foot with a string of gains taking the S&P 500 index back up 2.8% over the past five days.
The rally was led by familiar mega-cap technology names, with Alphabet (GOOG:NASDAQ) up 3.2%, Amazon.com (AMZN:NASDAQ) up 5.1%, Apple (AAPL:NASDAQ) up 3.3%, Microsoft (MSFT:NASDAQ) up 3.7% and Nvidia (NVDA:NASDAQ) up 5.1%.
Despite an initial jump in oil prices following the outbreak of violence in the Middle East, large-cap energy stocks were losers with Chevron (CVX:NYSE) losing 1.6% and ExxonMobil (XOM:NYSE) losing 2.3%.
The economic focus of the week was September’s inflation figure, which turned out to be an anticlimax as the headline number came in exactly as expected at 4.1% against 4.3% in August.
The data was fairly ‘noisy’, with surprisingly high shelter (housing) costs offset by deflation in durable goods including used cars, but the bottom line is inflation is falling.
‘The Fed should see this as further validation of its success in taming inflation and refrain from further rate hikes’, commented Lazard’s chief market strategist Ron Temple.
BIRKENSTOCK
German sandal maker Birkenstock (BIRK:NYSE) tripped up on its market debut on 11 October, falling 12% below its $46 IPO (initial public offering) price as investors proved rather more lukewarm on the brand than fashionistas have been in recent times.
Data from LSEG shows this is the worst start for a new listing worth more than $1 billion in two years, with some suggesting the company and its advisers were too greedy in setting the price.
Often new floats on the stock market are priced to pop, but apparently not in this case.
The negative share price performance implies doubts about Birkenstock's ability to diversify from its core sandal product range into new areas like trainers, clogs, shoes and boots.
The problems faced by another iconic footwear brand UK-listed Dr. Martens (DOCS), now trading at not too much more than a third of its 2021 issue price, may also have been in the minds of prospective shareholders.
TEMPEST THERAPEUTICS
Clinical-stage cancer drug development company Tempest Therapeutics (TPST:NASDAQ) caused huge excitement on Wednesday (11 October) after revealing its investigational liver cancer candidate PTST-1120 in combination with Roche’s (ROG:SWX) Tecentriq and Avastin showed clear clinical superiority compared with standard care.
The shares jumped nearly 40-fold on the day at their peak before halving on Thursday but remain 17-fold higher since the start of the year.
Patients taking the triple-therapy combination had an overall progression-free survival rate of seven months compared with 4.3 months for those on standard care.
The company also announced a Rights Plan or ‘poison pill’ to protect shareholders from a hostile takeover.
Chief executive Stephen Brady said: ‘The Rights Plan should reduce the likelihood that any person or group gains control of Tempest through open market accumulation without paying all stockholders an appropriate control premium or without providing the Board sufficient time to make informed judgments and take actions that are in the best interests of all stockholders.’
PEPSICO
Soft-drinks-to-snacks powerhouse PepsiCo’s (PEP:NASDAQ) shares popped after putting up (10 October) better-than-expected third quarter sales and earnings and pleasing with another upwards revision to its full year earnings outlook.
However, shares in the Pepsi, Quaker Oats and Doritos maker were down 3.6% at $163 over the week on worries over the short-term volume impact from multiple price hikes and concerns over the potential long-term impact of weight-loss drugs Wegovy and Ozempic on snacking habits.
PepsiCo’s quarterly adjusted earnings came in at $2.25 a share on sales of $23.45 billion, ahead of the $2.15 and $23.39 billion expected respectively, as the company served up palate-pleasing organic growth of 9%.
PepsiCo now expects full-year earnings per share growth of 13%, up from earlier guidance for growth of 12%, and continues to expect full-year 2023 organic sales to increase by 10%.
