A strong sell bias continues among company insiders across the market, as stocks breach trough historic levels.» Read More
Despite the government shutdown last month, the latest employment figures show the economy added 204,000 jobs in October, an increase of 56,000 month over month, while the unemployment rate rose to 7.3 percent.
Economists expected the numbers to increase by 120,000.
With an uptick in the unemployment rate, the labor-force participation rate, a measure of both people who are working and those who are actively looking fell by 40 basis points to 62.8 percent, it's lowest level in more than three decades. The 30-year average stands at around 65.8 percent.
At the same time, the employment-population ratio, which measures the percentage of adults over 16 who have a job also decreased by 30 basis points to 58.3, the lowest it's been since July 2011.
The current rally, which has sent the S&P 500 up nearly 24 percent this year, is on track to be the best in a decade. And based on historical statistics, odds are in favor of a higher year-end.
Since 1950, the market has risen more than 20 percent in the first 10 months of the year only four other times. In each instance, the S&P closed the year with a gain of at least 1.29 percent in the last two months.
Going back to 1929, the number of occurrences increases to 12 (10 of them before 1990), and the S&P finished the year with additional gains 83 percent of the time. (It was flat once, in 1938, and negative in 1943.) The average gain in November and December combined stands at 4.79 percent.
While past history does not guarantee future performance, the pattern suggests that the rally may not be over.
Some stocks that investors had given up for dead are defying the norm and finding new life in the current rally.
First Solar, for example, is up 63 percent in 2013, after posting a loss for five consecutive years. In fact, the stock is still off by 84 percent from its record price of $317 back in May 2008.
Another solar name that has made a comeback is SunPower. The stock is up 347 percent year-to-date—also on track to break a five-year losing streak in which it plunged 96 percent.
Both of those names are heavily shorted. First Solar has short interest of 17 percent, while SunPower has a short ratio of 28 percent.
Sanjay Shrestha, an analyst with Lazard Capital Markets covering alternative energy, cites improved profitability and cash flow in recent years for the strong performance.
"Strong demand in multiple new markets is driving ongoing cost reductions and fueling a resurgence in the solar industry," he said.
Another name pretty much given up on is RadioShack. After plunging nearly 89 percent in the past two years, shares are up 33 percent this year, trading at about $2.81.
Despite the S&P 500's rising 23 percent and the Nasdaq 100's surging 28 percent this year, many of their components haven't been able to join the rally.
Are these the new zombie stocks?
With stocks near all-time highs, investors are taking on record levels of margin debt, something that could accelerate a decline if the market turns south.
Margin levels, or the amount borrowed to purchase securities, climbed to a new record of $401 billion in September, according to NYSE Euronext data released this week. The monthly increase of 4.78 percent was also the largest gain since January. The NYSE figures represent the margin accounts of member firms.
"Investors love going on margin in a rising market environment, but when the market declines, it can be extremely painful" says Paul Hickey, co-founder of Bespoke Investment Group. "Don't forget that if you go on margin you also have to pay interest on that loan, and some brokers charge pretty high rates, so you are already starting in the hole."
Wall Street doesn't seem to care if companies are carrying debt on their balance sheets – as long as they are putting that money to work, perhaps even towards a dividend or buyback.
CNBC research shows that only about 23 companies in the S&P 500 have managed to stay debt-free. Yet, when looking at the year-to-date stock performance, only eight of these names are outperforming the S&P 500. Those companies are Chipotle, MasterCard, Bed Bath & Beyond, Paychex, Visa, Akamai, Robert Half and Forest Labs. Out of these, Mastercard, Paychex, Visa and Robert Half all pay a dividend.
Lazard Capital's Managing Director Art Hogan says having no debt isn't necessarily a big plus for a company and that now it is actually a favorable time for companies to take on debt. "It makes sense for companies to take on reasonable levels of debt when it is affordable and interest rates are relatively low. Companies continue on the whole to have reasonable debt-to-equity ratios and most of the selling pressure that we have seen in this current uncertainty has been agnostic of debt levels and more of the risk off sell all stocks variety," says Hogan.
Since the S&P 500 hit a record price of 1,729.86 on Sept. 19, volatility is up more than 50 percent. While the market retracts from its highs, some of this year's winners are bearing the brunt of the losses.
Case in point: Vertex Pharmaceuticals. The stock gained more than 90 percent before pulling back almost 20 percent from its 52-week high. While investors have benefited handsomely year-to-date, some of those gains are evaporating. Similarly, First Solar is trading more than 28 percent below its 52-week high in May, after nearly doubling from the beginning of the year through May.
Other major indexes are also feeling the heat. The Nasdaq 100 has fallen 2.7 percent in the past two days, its worst two-day loss in over three months, while the Dow is off by 930 points, or 6 percent, from its all-time high of 15,709.58 in September.
Some Wall Street darlings, including Facebook, Netflix, Priceline and Yahoo, are down over 8 percent for the week. Biotech is also getting hammered. The NYSE Arca Biotech Index fell by 4.5 percent on Tuesday—its worst percentage drop in two years. One reason for the sharp decline is that these stocks have been hot performers, with S&P 500 biotech companies up about 60 percent in 2013.
Here are other names that had phenomenal runs this year but are now pulling back.
As Wall Street deals with the effects of the U.S. government shutdown, investors are also bracing for another hectic earnings season set to begin this month.
Preliminary guidance for third-quarter results provides little case for optimism. For Q3 2013, only 18 companies have issued positive EPS guidance, whereas 94 companies have issued negative guidance—the highest number since at least 2006, according to figures compiled by Thomson Reuters I/B/E/S.
The Nasdaq 100 is up big this year, but the companies leading the gains may not be the ones you think.
The stock market gains this year are shaping out to be the best in well over a decade. With September heading toward its close, the S&P 500 is on track for its best first three quarters since 1997.
The index has soared 19.4 percent this year, but how long will the rally continue?
Since 1928, the market has been up this much only 14 other times. In 10 of those instances, the S&P 500 continued to climb in the last quarter of the year, posting an average gain of 6.9 percent.
When the market was down, however, it was down big. Consider two of the last four times the S&P 500 fell in Q4, both of which took place during crash years: Q4 1987 (-23%) and Q4 1929 (-29%).
Anytime there's a $40 billion transaction being announced, you take notice. That's the case for Microsoft, which set a massive stock buyback program along with a dividend increase on Tuesday, two days ahead of a highly anticipated investor meeting.
Microsoft is trying to make a pledge to shareholders that it will remain friendly by authorizing a $40 billion stock buyback program, replacing the prior $40 billion stock buyback plan set to expire at the end of this month.
It also boosted its quarterly dividend by 22 percent to 28 cents per share. On Thursday this week, shareholders will learn from Microsoft about its plans to replace Chief Executive Steve Ballmer, who is expected to retire within a year.
Microsoft is not alone, though; there are a host of other companies that could be candidates for dividend increases.
The Nasdaq Dividend Achievers Index looks at US companies that are traded on either the Nasdaq or NYSE and have raised their yearly dividend payments for at least the last 10 years.
Three of the stocks caught our eye.