Will stocks carry October’s rush into next month

31 Oct 2015 | Author: | No comments yet »

Stocks book biggest monthly gain since October 2011.

U.S. stocks ended Friday’s session lower, but the main indexes recorded a fifth straight week of gains and booked the largest monthly gain in four years.

Investors attributed the broad stock-market gains this past month to global central banks, which have either talked up the prospect of further stimulus to boost sagging inflation and growth, or delayed interest-rate increases that would tighten monetary policy. Investors took the Federal Reserve’s hawkish statement, which explicitly mentioned a possibility of and interest-rate increase at its December meeting, in stride, posting big gains after the announcement on Wednesday. On Friday, the Dow slipped 92.26 points, or 0.5%, to 17663.54 and the S&P 500 lost 10.05 points, or 0.5%, to 2079.36, weighed down by financial companies, which pulled back after rallying earlier in the week. The Nasdaq Composite edged down 20.53 points, or 0.4%, to 5053.75. “The rally in October has been fantastic and extremely strong,” said David Lyon, global investment specialist in San Francisco for J.P. Morgan Private Bank. “The volatility that reared up in August and September was really driven by two things, China and worries about the [Federal Reserve] and rate hikes,” but both fears lessened in October.

Shares of LinkedIn climbed 23.87, or 11%, to 240.87 after the social-networking company late Thursday reported a smaller-than-expected third-quarter loss and raised its guidance for the year. Most of the gains over the past month have come from the largest publicly traded companies, including big moves from Apple, Alphabet—the parent company of Google—and Amazon.com. The fact that markets climbed and held on to higher levels suggests that investors are holding to their investments,” said Colin Cieszynski, chief market strategist at CMC Markets.

AMZN -0.10 % “It’s a combination of relief that the China troubles aren’t going to cause a world-wide recession and decent earnings,” said Don Townswick, director of equities at Conning & Co. Consumer spending rose in September by the smallest amount since the start of the year, mostly because Americans spent less on gasoline after another drop in prices. The banks’ ultralow interest-rate policies have boosted stock markets in recent years, and expectations that some central banks could keep them in place for longer have buoyed investors’ appetite for equities. The Fed delayed raising interest rates after financial-market volatility in September, when many economists had expected the first increase in almost a decade.

After its meeting Wednesday, the Fed said a December rate increase was still on the table “Investors have been whipsawed, and I think they’ve come to the conclusion that, even with comments this week, the Fed is going to be on the sidelines for a while, money will continue to be cheap, and U.S. stocks are really the only place to be in investor eyes,” said Paul Nolte, senior vice president and portfolio manager at Kingsview Asset Management. Also, European Central Bank President Mario Draghi recently said the bank is prepared to expand its stimulus program and potentially cut interest rates further into negative territory as the bloc struggles with low inflation and a tepid recovery. In Asia, Japan’s Nikkei added 0.8% to a two-month high Friday after the Bank of Japan 8301 2.22 % left the size of its bond-buying program unchanged but lowered its growth and inflation forecasts.

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