October, an historically volatile month, is over, and few investors, especially those long the market, will mourn its passing. That is because in spite of the better performance the past two days, the month was brutal, to say the least. In all, October witnessed the cumulative market gains for the year on the Dow and the S&P 500 all but given up under furious selling engendered by escalating concerns about tariffs, global trade, and political and monetary headwinds at home and abroad. It was a difficult stretch and one that may not be over despite the month's better close.

Our sense, in fact, is that equity market participants remain on edge with next week's uncertain election results forthcoming, as well as with tomorrow's jobs report and next Thursday's Federal Open Market Committee meeting on the agenda. In all, we believe that the employment data will be reassuring and that the Federal Reserve will hold the line on interest rates. Also, there is the rest of the economy, which continues to give a reasonably good account of itself, and corporate earnings, with results largely strong for the third quarter on both the top and bottom lines.

As to yesterday's market, it opened strong and spent the rest of the morning heading higher, with the Dow Jones Industrial Average and other composites benefiting from stellar earnings, especially from social media behemoth Facebook (FB). That stock jumped by more than 6% early, on its reassuring results. All told, the market continued to rebound, with the best advance on the NASDAQ, where a number of tech names, bruised and battered for much of October, picked up strongly, gaining more than 2%. Still, it was a mostly large-cap surge, though, as the smaller issues, while up, lagged behind.

Also laboring on the day were the food stocks, with several big names posting rather large morning losses, including General Mills, with about a 5% early drop. Elsewhere, however, the advance continued to strengthen as the morning wound down, with the Dow climbing to close to a 400-point gain at one point. Among other tech stocks forging ahead, in an advance that helped the Dow again move up past 25,000, was Apple, with the iconic tech giant rising some $5 a share in early action; it would close up $5.56. Also gaining notably yesterday in early action were shares of General Motors (GM) on better quarterly results.

In all, as we headed into the afternoon, the Dow was still up close to 300 points, while the NASDAQ retained an advance of about 130 points. Things would then improve further through the lunch hour and beyond, so that as we reached the final two hours of the trading day, the Dow again was up close to 400 points while the NASDAQ had surged by almost two and a half percent. Although October remained a difficult month in 2018, the losses were sharply reduced as the month ended. Lingering losses in the processed food group, where Kellogg (K) shares were off some 7%, were indicative of the trying times for that sector.

The advance would gain additional momentum as the final hour approached, with the Dow surging to a gain past 400 points, as the S&P 500 Index and the NASDAQ reached increases of 50 points and 200 points, respectively. There was no place for the bears to hide. That said, there would be some selling into the close, with the key averages, which all peaked around 3:00 PM (EDT), pulling back somewhat as the session concluded. In all, the Dow would finish up 241 points; the S&P 500 would rise 29 points; and the NASDAQ would ease back to an advance of 144 points. Stocks in most sectors rose.

Now, following these back-to-back market wins, especially among the large-cap stocks (as the S&P Mid-Cap and the Russell 2000 each rose just slightly, we see that the principal indexes in Asia were mostly higher in overnight dealings, while in Europe, the major bourses are now up, as well. Also, oil, which fell yesterday, is down again this morning, and yields on the 10-year Treasury notes, which closed at 3.16% yesterday, are still at 3.16%. Finally, as attention now shifts to the economy and tomorrow's jobs report, which will follow yesterday's strong private-sector employment gain, we see that the U.S. equity futures are pointing to a nicely higher start.

– Harvey S. Katz, CFA

 At the time of this article’s writing, the author held positions in one or more of the companies mentioned.