With a gain of more than 4% today in reaction to earnings, Microsoft (MSFT) is suddenly challenging Apple (AAPL) for the title of world’s largest company.  Coming into today, Apple had a market cap of $2.468 trillion versus Microsoft’s market cap of $2.328 trillion.  That spread of $140 billion has shrunk all the way down to just $27 billion after Microsoft’s gain of $117 billion in market cap today alone.

As shown below, Microsoft (MSFT) had a market cap of $615 billion versus Apple’s (AAPL) market cap of just $15.9 billion back in late December 1999 near the peak of the Dot Com Bubble.  From there, Apple began to gain ground with its iPod and iPhone releases in the early and mid-aughts.  On May 26th, 2010, Apple’s market cap finally crossed above that of Microsoft and didn’t look back for quite some time.  Remember, before shifting focus on the cloud, Microsoft’s business was struggling mightily.  The company’s market cap essentially went sideways for 15 years before exploding higher again in the second half of the 2010s as Office 365 took hold.

While MSFT was actually bigger than AAPL at various points between 2018 and 2020, Apple’s widest market cap margin versus Microsoft actually came in January of this year when Apple was at $2.4 trillion versus MSFT at $1.74 trillion.  Since that peak on January 25th, though, MSFT has been rapidly gaining ground.  It will only take another small move higher on a relative basis for MSFT to eclipse AAPL’s market cap at this point.  AAPL reports earnings on Thursday, so how the stock responds to that report will have a big impact on how this relationship stands heading into the month of November. Click here to view Bespoke’s premium membership options.

It has been awhile since we checked in on Cathie Wood’s ARK ETFs, so below is an updated look at their relative strength versus the S&P 500 SPY ETF.  After absolutely surging versus SPY in 2020 and early 2021, the ARK funds have generally been underperforming for the past six months.  That being said, they’re still well ahead of SPY since the start of 2020 given that all the relative strength lines are solidly in positive territory.  As shown, the ARK Next Generation Internet ETF (ARKW) is doing the best versus SPY over the time period shown.  Notably, the ARK Autonomous Tech (ARKQ), Genomic Revolution (ARKG), and Fintech Innovation (ARKF) ETFs have all performed roughly the same versus SPY since the start of 2020 even though they cover different industries and groups.

Taking a look at the largest of the ARKK funds, the ARK Innovation ETF (ARKK) has basically been range bound between $100 and $125 over the last six months.  As shown below, ARKK recently managed to re-take its 50-day moving average, but it had trouble getting above resistance at its 200-day moving average. That is even with the massive rally we’ve seen in Tesla (TSLA) lately, which is ARKK’s largest holding at 10%.

As previously mentioned, TSLA is by far the largest holding of ARKK, especially after having rallied 17.8% in the past week alone. Skillz (SKLZ) has actually posted an even larger 20.9% rally in the same span, but its weighting is far smaller at only 0.69%, meaning its gains have been much less impactful on ARKK’s performance.  As for the rest of the holdings, not even half are in the green over the past five days and only 38% are in the green year to date. Three holdings—Proto Labs (PRLB), Materialise (MTLS), and Berkeley Lights (BLI)—have seen their price more than cut in half since the start of the year. As shown in the snapshot of our Trend Analyzer below, the bulk of these stocks are also in sideways trends.

Now in the throes of earnings season, most of the ARKK holdings have yet to report results but they are scheduled to do so in the coming weeks.  Of those left to report, Roku (ROKU) has averaged the strongest one-day gain in reaction to earnings historically with strong beat rates for sales, EPS, and guidance. Speaking of beat rates, DocuSign (DOCU) is notable in having almost exclusively reported Triple Plays throughout its three-year earnings history.  Click here to view Bespoke’s premium membership options.

There are only three sessions left in the month of October, and the S&P 500 enters them up 6.2% month to date. That marks the best performance through the final three trading days of any month since last November when the S&P 500 was up 11.2% MTD. In the post-WWII period, there have been 95 occurrences where the S&P 500 was up 5% MTD heading into the final three trading days of the month.  In those prior months, the S&P 500 has averaged a gain of 7 bps in the final three trading days which is below the average gain of 22 bps in the final three days for all months during that same period.  While there is that short-term underperformance, the last three trading days of the given month through the first week of the next month has averaged better than average performance (0.72% vs 0.61%).  As for where the S&P 500 goes from there, performance is mixed relative to the norm. Through the end of the following month, returns tend to again be worse than normal, but three months later the S&P 500 has averaged a nearly half percentage point larger gain than the norm.  Click here to view Bespoke’s premium membership options.

Like yesterday’s Dallas Fed reading, the Richmond Fed’s Survey of Manufacturing Activity experienced a larger than expected bounce this month as the headline reading rose from -3 to 12. That compares to expectations of a modest increase to only 5.  October’s bounce has helped to recover a decent chunk of the steep drops from August and September.

The rise in the composite reading was thanks to broad increases across the report.  The only indices that declined month over month were those of Equipment and Software Expenditure, Raw Materials Inventories, Wages, and Prices Paid. Whereas there were several indices in contraction last month, most moved back into expansionary territory.

By far the most impressive increase this month was in New Orders.  Last month, the index plummeted into the bottom 5% of readings, but after a 29 point increase (which ranks as the fourth-largest monthly gain on record), it is back in positive territory. That was met with a solid uptick in Order Backlogs, but the Shipments component remains much more muted and barely positive.  That is likely due to supply chain delays as the index for Vendor Lead Times set a new record high.

Another issue tied into low shipment growth and delays is rapidly declining inventory levels for both inputs and finished goods. While the former saw a modest bump this month, both indices are only slightly above record lows.

Price indices remain at historic levels and like the indices for inventories, the index for input prices moved lower in October while Prices Received set a new record high at 9.42% annualized. The expectations indices for these two categories saw the opposite results with a new high in Prices Paid and a small decline in Prices Received.

Employment indices were generally stronger in October with upticks in the Number of Employees, Average Workweek, and Availability of Skills.  For the Number of Employees, although the current reading is off the peak, it is still above anything observed prior to the pandemic. The same can be said for Wages while the Availability of Skills is back within the range that was in place in the few years leading up to the pandemic. Click here to view Bespoke’s premium membership options.