Fundamentals rule this week particularly in healthcare. With 70 per cent of S&P 500 stocks having reported during this earnings season, all sectors have surprised with greater than expected earnings with the exception of financials. Revenues by sector are mixed but on average slightly better than analysts’ expectations. US markets were slightly positive on the week with global markets slightly negative.

US pharmaceutical company AbbVie is a case in point. Reports during the week ending October 23, that the FDA would require that AbbVie to place safety warnings on labels of its Viekira Pak Hepatitis C drug stating that it could cause serious liver injury in patients with advanced liver disease, drove the stock price down some 10 per cent on that week.

The Hepatitus C drug makes up some 7.3 per cent of AbbVie’s revenues whilst Humira (Arthritis) makes up 61 per cent of revenues and another drug for treating leukaemia and lymphoma makes up another 5.8 per cent.

Although its Hepatitis C drug gets a lot of publicity, it is not the company’s major revenue producer and the impact on its share prices seemed overdone. On Friday, the company reported earnings in excess of expectations ($1.13 per share versus an estimate of $1.081 per share) on revenues that also beat ($5.944 billion versus estimates of $5.887 billion). For the week ending October 30, AbbVie was up 18.3 per cent more than reversing the 10 per cent drop from the week before. (The stock price is up another 6.43 per cent at the time of this writing yesterday.) The combination of market fear and strong fundamentals has resulted in wide swings in this stock’s share price.

As we expected, the Fed agreed once more to defer the hike in the Fed Funds rate until a later date. The odds are 50/50 that the hike will take place in December. Bias expects an one eighth of a per cent hike at this time subject to no deterioration in the economic data.

Third-quarter GDP came in slightly lower than expected at 1.5 per cent attributed to a slowing of inventories accumulation. Ex-inventories, GDP rose a respectable 3 per cent. Consumers continue to spend which leads our analysts at Bias to be optimistic about US economic growth.

Anecdotally I spent the weekend in New York City where Microsoft last week opened a flagship store on Fifth Avenue. I visited to store and noted the following:

• It very much copies the style and format of Apple stores.

• Aside from its Surface laptop/tablet, it has avoided going head to head with Apple.

• Microsoft has developed its own health monitor wrist band.

• It has a very impressive conference flat-screen monitor which allows multi-locations to work on the same spread sheets and illustration board.

• Xbox maintains strong positioning in computer gaming consoles.

• When Microsoft hardware was not on display, the store used other brands as well as Dell. In fact Dell occupied the entire third floor of the store.

The store was packed with geeks, wannabe geeks, and people like me who need millennials to explain how to interact with rapidly evolving technologies.

I also visited the Apple store. It was also packed. Everyone is engaged in the technological revolution, both professionally and personally. As technologies advance, consumers will upgrade their hardware and software. Those who hold shares in these companies will participate in their profits.

Volatility be damned. Fundamentals rule!

Robert Pires is the chief executive officer of Bermuda Investment Advisory Services (Bias).