U.S. Markets End Volatile Bearish Month on Positive Note

Stocks rallied on Wednesday to end the month on a positive note, but the move fell well short of recovering the huge losses suffered in October. The major indices were supported by strong earnings from General Motors and Facebook.

General Motors reported quarterly results that easily beat expectations. The company claimed in its report that it sold fewer cares during the third quarter, but at a higher price, boosting its bottom line. The news helped spike shares of the company 9.1 percent higher.

Facebook also rose on Wednesday on the back of better-than-expected earnings. Comments by CEO Mark Zuckerberg also helped underpin the stock. During the company’s earnings call, Zuckerberg discussed the company’s plan to invest significantly in its business next year. He also said Facebook plans to build products such as Facebook Watch and Instagram TV. The stock rose 3.8 percent on the news.

In the cash market on Wednesday, the benchmark S&P 500 Index settled at 2711.54, up 29.11 or +1.09%. The blue chip Dow Jones Industrial Average closed at 25115.76, up 241.12 or +0.97% and the tech-driven NASDAQ Composite finished at 7309.88, up 148.23 or +2.07%.

Despite strong performances the last two days of the month, the major indexes still posted massive losses. CNBC summed it up this way:

“The S&P 500 lost 6.9 percent in October, its biggest one-month slide since September 2011, when it fell 7.2 percent.”

“The Dow dropped 5.1 percent to post its biggest monthly fall since January 2016, when it dropped 5.5 percent.”

“The NASDAQ Composite plunged 9.2 percent, its largest monthly pullback since November 2008, when it shed 10.8 percent.”

U.S. Treasury Markets

U.S. Treasury yields rose on Wednesday after a report showed the private sector of the economy added more jobs in October than estimated. The move helped support the Fed’s plan to raise rates in December.

According to ADP and Moody’s Analytics, private payrolls increased by a better-than-expected 227,000 in October. This was higher than the 189,000 forecast.

At the end of the session, the yield on the benchmark 10-year Treasury note settled higher at 3.149 percent, while the yield on the 30-year Treasury bond settled at 3.391 percent.

U.S. Dollar

The strong jobs data and the firmer Treasury yields helped send the U.S. Dollar to a 16-month high against a basket of major currencies. The U.S. Dollar Index also finished higher for a seventh straight month.

The strength in the U.S. Dollar is basically being fueled by the divergence in monetary policy between the hawkish U.S. Federal Reserve and the other dovish major central banks.