Blink and You May Have Missed It

Mike Mallak By | On November 3, 2014

Over the last month, the stock market has taken us on a true roller coaster ride.  This means we have had frightening down days and exciting up days but, like a real roller coaster, we have ended nearly back where we started.  The correction we experienced in October was the largest of the year thus far, but the rebound in stock prices has been just as impressive.

At the beginning of October, the S&P 500 index of US stocks was at a value of 1972.  Over the first half of October we witnessed seven down days for the S&P 500; and fairly big own days at that.  On October 15th, the S&P reached an intraday low of 1820, just two points shy of a 10% correction in stock prices from highs reached in September.  Since October 15th we have experienced almost the exact opposite, seven up days for the S&P 500.  The net result of this volatility and correction in stock prices is, as of October 29th, the S&P500 has actually gained 10 points in the month of October to close at 1982.

There were many reasons which led to the correction in stock prices including the Ebola outbreak, turmoil in Ukraine, Iraq, and Syria, anemic growth in parts Europe, and a slowdown in China.  What seems more important are the reasons why we reversed course upwards so quickly.  October welcomed third quarter earnings reports from companies that were quite impressive.  Earnings are largely beating expectations and painting a fairly good picture for future growth as well.  Add to this positive economic data on employment, accelerating leading economic indicators, and cheaper prices at the pump leading into a busy holiday shopping season; it becomes easy to see why we have had such a swift move off the lows reached in October. We are still slightly short of the highs seen in September, but we are well on our way.

 


All indices are unmanaged and investors cannot actually invest directly into an index. Unlike investments, indices do not incur management fees, charges, or expenses. Past performance does not guarantee future results