It’s November. Already. Autumn is passing by too quickly. The windy weekend stripped most of the color from the trees, baseball season has ended, and the opportunities to play golf are few. The first snowfall could happen any day. Look forward, football season is entering the most exciting period and Thanksgiving is only several weeks away. As Gordon Ramsay said, “I don’t like looking back. I’m always constantly looking forward. I’m not the one to sort of sit and cry over spilled milk. I’m too busy looking for the next cow.”
Who’s afraid of October? Stocks finished the week and what is typically a poor market month at record highs after a wild ride that saw prices fall sharply at mid-month before surging higher. The major indexes delivered Halloween treats, as the Dow soared 3.5% last week in active trading.
The fireworks began Wednesday with a brighter view of the U.S. economy and jobs picture from the Federal Reserve, and accelerated Friday on a surprise announcement from the Bank of Japan that it would increase its asset purchases to boost its economy.
Additionally, markets welcomed news Thursday that the U.S. third quarter gross domestic product rose at a higher-than-expected 3.5% annual rate. That assuaged investor fears after the Fed also said Wednesday that, as long anticipated, it ended its monthly quantitative-easing program. Continued strong third-quarter earnings from Corporate America also bolstered investor enthusiasm.
Both the Dow Jones Industrial Average, up 585 points or 3.5% to 17,390.52 last week, and the Standard & Poor’s 500 index, which gained 54 to 2018.05, finished at all-time highs. The Dow rose 2% in October, the S&P 500 2.3%. The Nasdaq Composite index added 147 or 3.3% last week to 4630.72.
“The Fed’s upbeat view of the economy says the long-term U.S. expansion is on track and calmed any fears about the end of QE,” says one market strategist. The Bank of Japan’s surprise move will boost slow global growth, he adds.
That slow growth led to the earlier big drop, says Dan Greenhaus, BTIG’s chief global strategist. It’s been a powerful snapback, helped by good earnings, which are countering fears about plunging oil prices, weak global growth, and a strong dollar. Thomas Lee, co-founder of Fundstrat Global Advisors, says that institutional investors remain cautious despite the market recovery. That augurs well, he adds, for the near-term as markets head into November, the beginning of the historically auspicious November-to-April season for stocks.
Conspiracy theorists might wonder about the Fed’s timing in ending QE, which was followed within 48 hours by BOJ’s bond-buying. Consider the baton passed.
In case anyone forgot, there’s a national election in the U.S. Tuesday, but investors don’t seem to care much about it.
