Though last week ended up being a merely mediocre one for the stock market, the entire month of October ended up being the best month for stocks in four years. All told, last week’s 0.2% advance for the S&P 500 (SPX) (SPY) meant an 8.2% advance for the calendar month.
And yet, despite the decidedly bullish momentum, the indices are not at multi-month new highs… a testament to how nasty August’s pullback was. On the flipside, the indices are above all the key moving average lines and we are at a time of year that’s generally bullish for stocks. A little bullish verification could go a long way.
We’ll weigh everything below. First, however, we’ll run down last week’s big economic news.
Economic Data
Though last week was loaded with economic data, not a great deal of it was heavy-hitting.
The biggest news, of course, was the decision from the Federal Reserve to not alter the Fed Funds rate in October from its current rate of 0.25%. But, the Fed did make it clear a December rate hike was still a distinct possibility even though the market had effectively dismissed the idea. With the Federal Reserve suggesting the economic situation may be better than it superficially seems, traders were willing to buy in the wake of the news… even if that bullishness didn’t last.
We also learned the initial reading on Q3’s GDP growth was a less thrilling 1.5%, versus a final growth reading of 3.9% in Q2. The Q3 number, however, will be revises two more times, so don’t get married to the figure.
It was also a fairly important for real estate, with an updated pace of new-home sales as well as August’s Case-Shiller Index of home prices.
Prices were fine; they grew 5.1% (on a year-over-year basis) two months ago. But, new-home sales suspiciously fell to an annualized pace of 468,000. That’s the weakest reading since last November.
Real Estate Prices and New Home Sales Chart
Source: Thomas Reuters
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