The dependence on Federal stimulus spending along with positive earnings and stronger-than-expected manufacturing data in China elevated US equity markets to new highs in October. The Federal Reserve maintained its bond buying policy citing sluggish employment growth. The probability of any policy change for the remainder of the year is extremely low due to weak hiring projections and uncertainty regarding fiscal policy negotiations. For the month, the Dow Jones Industrial Average, S&P 500 and NASDAQ advanced 2.8%, 4.5% and 3.9%, respectively. Year to date, the Dow, S&P 500 and NASDAQ are up 18.6%, 23.2% and 29.8%, respectively.

All four IBO Stock Indexes traded higher this month, led by the Laboratory Instrumentation Stock Index, which grew 4.3%. The Lab Consumables/Equipment and Diversified Instrumentation Stock Indexes improved 3.2% each, and the Process/Metrology/Motion Instrumentation rose 1.4%.

Laboratory Instrumentation Stock Index

For October, the Index climbed 4.3% to close at 902.42. Eleven companies increased in value, led by Transgenomic, which soared 45%, and eight declined. Year to date, the Index is up 36.2%, with 16 advancing and three losing ground. Pacific Biosciences leads the Index, having advanced 142%. Sequenom is down 28% and 59% for the month and year, respectively.

On the positive side, six Laboratory Instrument companies beat EPS expectations and raised outlooks. On October 17, Cepheid narrowed its 2013 adjusted EPS loss outlook by 15% to $0.20–$0.18 due to strong adoption of the GeneXpert systems. Shares jumped 5.7% the next day. Illumina raised its full-year EPS guidance by 4% on October 21 to $1.75–$1.77. Shares climbed 10.1% the next day. On October 23, Thermo Fisher Scientific raised the low range of its 2013 EPS forecast by $0.02 to $5.29–$5.39. Shares climbed 1.7%. On October 30, Accelrys raised the low end of its full-year forecast by $0.01 to $0.33–$0.34. Shares gained 1.1% the next day. Fluidigm raised its full-year sales growth range on October 30 to 32%–34% from 27%–31%, leading shares up 24.4% the next day. PerkinElmer also beat third quarter EPS estimates on October 30, but narrowed its 2013 EPS range from $2.03–$2.10 to $2.04–$2.07. Shares slipped 0.6% the next day.

Conversely, on October 22, Pacific Biosciences missed third quarter EPS estimates and warned that fourth quarter consumables sales would be negatively impacted by the government shutdown. Shares slumped 18.9% the next day. Waters also missed third quarter EPS on October 22 and lowered its full-year EPS guidance by 2% to $4.92–$4.97. Fourth quarter EPS are projected to be $1.58–$1.63. Shares fell 6.0%.

In other news, Sequenom fell 22.6% on October 31 after the company reported that it lost a ruling against Ariosa Diagnostics regarding infringement of its prenatal genetic testing patent.

Both Mizuho and Bank of America downgraded Waters from “Buy” to Neutral” on October 14 and October 23, respectively. On October 1, Cepheid was downgraded by both Bank of America and Merrill Lynch from “Buy” to “Neutral.”

Process/Metrology/Motion Instrumentation Stock Index

The Index increased 1.4% to 749.39 this month and is up 32.3% for the year. For both the month and year, four companies were in positive territory and two declined. Nanometrics surged 15% and 29% for the month and year to lead the Index, respectively. Leading the decline for the month was Veeco Instruments, which fell 22%. Zygo is down 2% for the year.

MKS Instruments reported on October 23 that orders from the semiconductor industry were improving and projected fourth quarter EPS of $0.31–$0.41. Shares climbed 4.3% the next day. Nanometrics jumped 14.0% on October 29 after the company reported strong third quarter results. The company projected an EPS loss of $0.08 to a gain of $0.03 for the fourth quarter. On October 29, FEI projected fourth quarter GAAP EPS of $0.87–$0.97, which were in line with expectations. Shares increased 0.9% the next day.

Oppenheimer downgraded Veeco on October 15 from “Outperform” to “Market Perform.” On October 30, Pacific Crest upgraded Nanometrics to “Sector Perform” from “Outperform.”

Lab Consumables/Equipment Stock Index

The Index grew 3.2% in October to 853.46. Six companies advanced and two contracted. Techne recorded the largest increase, rising 9%, while Cellular Dynamics fell 23%. For the year, the Index has risen 30.1%, with seven companies up in double digits and Enzo Biochem down 8%. Life Technologies maintains the largest gain, having climbed 54%.

Sigma-Aldrich beat third quarter EPS estimates on October 22 and raised the lower end of its 2013 range by $0.03 to $4.08–$4.15 due to tax benefits. Shares rose 1.2%. On October 29, QIAGEN reaffirmed its full-year EPS outlook of $1.13 and projected fourth quarter EPS of $0.35. Shares rose 1.7% the next day.

BNP Paribas downgraded QIAGEN on October 4 from “Neutral” to “Underperform.” However, the company was upgraded by Cowen on October 31 to “Market Perform” from “Underperform.” On October 17, Morgan Stanley initiated coverage of Sigma-Aldrich with an “Underweight” rating. On October 29, Jefferson Research upgraded Enzo Biochem from “Hold” to “Buy.”

Diversified Instrumentation Stock Index

The Index gained 3.2% to 201.46 this month. Six companies improved and two declined. Xylem recorded the largest gain, jumping 24%, while Roper Industries fell 5%. For the year, the Index has advanced 27.3%, with all eight companies up in double digits. Teledyne Technologies has the higher return, having risen 36%.

Danaher, Teledyne and Xylem each beat third quarter EPS estimates. On October 17, Danaher reaffirmed full-year adjusted EPS of $3.37–$3.42. Shares climbed 4.6%. On October 24, Teledyne raised its 2013 GAAP EPS outlook by 3% to $4.64–$4.67. Shares rose 1.1%. Xylem raised its full-year EPS forecast by 10% on October 29 to $1.60–$1.65. Shares jumped 12.4%. On October 29, AMETEK projected full-year EPS of $2.09, which was towards the lower range of its previous forecast. Fourth quarter EPS are projected to be $0.54. Share climbed 3.7%. In contrast, on October 28, Roper lowered 2013 EPS by 3% to $5.57–$5.63 due to slower growth in energy markets. Fourth quarter EPS are projected to be $1.57–$1.63. Shares fell 6.6%.

Stifel Nicolaus downgraded Agilent Technologies on October 1 from “Buy” to “Hold” due to valuation. On October 17, Atlantic Securities started AMETEK with an “Overweight” rating. Brean Capital upgraded Xylem on October 29 from “Hold” to “Buy.” The next day, the company was upgraded by DA Davidson from “Underperform” to “Neutral,” but downgraded by KeyCorp from “Buy” to “Hold.”

International

In October, four Pacific Region companies declined and three improved. Precision System Science (PSS) declined the most, falling 23%, while Shimadzu advanced 3%. For the year, all seven companies are in positive territory, led by PSS, which has gained 503%.

On October 25, Hitachi High-Technologies reported that fiscal second quarter EPS grew 3% to ¥36.86 ($0.37), which was just below the company’s July forecast. The company maintained its fiscal full-year EPS forecast of ¥143.23 ($1.51). Shares fell 2.1%.

This month, nine European companies were in negative territory and five increased. Year to date, prices for 11 European companies are trading higher and three are lower. Porvair leads all companies for the month and year, having gained 6% and 65%, respectively. Renishaw is down 10% and 22% for the month and year, respectively.

Several UK-based companies reported financial updates this month. Renishaw announced on October 17 that fiscal first quarter 2014 sales fell 17.6% to £79.0 million ($121.5 million) and profit before taxes fell 61.7% to £10.6 million ($16.3 million) due to expected lower consumer electronics sales. Shares fell 5.7%. Spectris announced on October 18 that third quarter sales grew 5%, or 3% organically. However, the company projected that full-year EBITA would fall in the lower range of its previous outlook of £214.0–£226.5 million ($330–$350 million). Shares rose 1.2%. On October 21, Sartorius reported that adjusted third quarter EPS fell 14% to €0.87 ($1.16). Full-year sales are projected to grow 7% excluding currency, which falls within the company’s previous outlook of 6%–9%. Shares rose 1.3%.

On October 25, Biotage reported that third quarter EPS doubled to SEK 0.10 ($0.02) due to lower operating and financial expenses. Shares improved 1.0%. Exiqon reported on October 29 that third quarter EPS loss widened by 150% to DKK 0.05 ($0.01) due to significantly higher R&D expenses. The company maintained its full-year revenue guidance of DKK 130 million ($23 million) for growth of 10%, and projected positive EBITDA. Yet shares fell 3.4%.

Goldman Sachs downgraded Renishaw on October 15 from “Buy” to “Neutral” but raised their price target by 17% to £21.00 ($33.52). On October 23, Numis Securities downgraded Abcam from “Buy” to “Add.”