Whether it’s the stock market as a whole, or individual shares, I think there’s a lot to look out for in October. The next few weeks should go some way towards answering quite a few questions.
In both the UK and the US, there are some important events that are set to unfold. And I’m looking to use them to guide my investing in the next month and beyond.
US unemployment
The Federal Reserve has started to cut interest rates. That means the big question for investors is whether or not this is going to be enough to avoid a recession.
If it isn’t, then shares in companies that operate in more cyclical industries could fall quite significantly. And this could present buying opportunities for Foolish (with a capital F!) investors with a long-term outlook.
A recession can be a great time to buy shares for the long haul. And there can be especially good value in companies that will do well over time but are facing short-term difficulties.
On October 4th, US unemployment data is due to be released. This could be one of the first indications of whether or not the country is going to avoid an economic downturn.
If things look positive, however, I’d expect cyclical stocks to do well over the next year or so. As a result, I’ll be looking elsewhere to find value in the stock market.
I’ll be paying attention to the jobs report from the US this month. I’m not looking to buy a stock just based on macroeconomic data, but it might give me an idea of where to look for bargains.
Rentokil Initial
Over on this side of the Atlantic, Rentokil Initial (LSE:RTO) is due to release a report for the third quarter of 2024. I think this could be an important one for the company and its investors.
In September, the stock fell 20% as the firm reported disappointing revenue growth in the US during the first half of the year. On top of this, higher costs cut into profit margins.
Part of this is due to a big acquisition that is taking time to integrate. But shareholders might justifiably be starting to wonder whether the deal is going to work out as well as they hoped.
Rentokil is looking to bring down its costs by reducing the size of its workforce. And the update in October is the company’s first chance to show investors it is making progress in this regard.
I think the long-term outlook for the business is positive. It has a strong position in a growing market and I expect this to prove valuable over time.
Nonetheless, I’ll be looking for signs of improvement. Investors have had a reminder of the risks with the stock lately and I’m hoping to see management is making progress in addressing these.
Investing in October
The stock market is finely balanced right now. What happens next might depend on whether or not the US falls into a recession, and the upcoming jobs data should give an indication of this.
On top of that, I’m looking for Rentokil Initial to bounce back from a disappointing update in September. That’s where I’m directing my attention in the next month.
The post 2 things I’m watching in the stock market in October appeared first on The Motley Fool UK.
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Stephen Wright has positions in Rentokil Initial Plc. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
