Stocks were mixed last week as the small-cap Russell 2000 Index declined over 2%, while the Dow Jones Industrial Index posted a marginal gain. Bonds gave up some ground.
With the election around the corner and the last week of October being the most bearish week historically, most asset classes sold off. There were some positives including Friday's U.S. GDP report, which topped expectations at an annualized 2.9 percent. The largest contributor in the quarter was personal consumption, adding 1.5 percentage points to the quarter's rate.
Flash Services PMI showed a solid uptick with business activity and incoming new work both expanding at the fastest pace in 11 months. The Manufacturing PMI also accelerated sharply, up 2 points to 53.2 in October. New home sales in September were up 3.1 percent to a 593,000 annualized rate showing strength in the new home market.
M&A was very active last week to conclude one of the biggest months, in terms of dollar value, of mergers and acquisitions ever. On Monday, four deals were announced: AT&T for Time Warner (TWX), Rockwell Collins (COL) for BE Aerospace (BEAV), TD Ameritrade (AMTD) for Scottrade, and a private Chinese company for Genworth Financial (GNW).
In the technology sector, Apple (AAPL) reported results that met expectations, and presented its new Apple TV product and new Macbook in a separate event. In between that, Microsoft (MSFT) showed off its new Surface Studio all-in-one computer, new Surface Book laptops, and next update for Windows 10, the "Creators Update". Alphabet (GOOGL) posted 20% revenue growth on Thursday driven by Google websites. Improved ad formats, new AI-based hardware, and cloud services are expected to continue driving strong results going forward.