A traditionally troublesome month is turning out to be anything but for the stock market…so far. Who would have thought, based on the way things ended last month, and the start to the first full week of October, that investors would be sitting pretty now. Certainly not Dennis Gartman.
Yet, here we are. Look at us, as actor Paul Rudd might say.
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Indeed, the Dow Jones Industrial Average is on track for its best month since March when it rose 6.62%, FactSet data show.
The rally, in what is typically one of the weakest months of the year, has put blue-chips within 1% of its Aug. 16 record closing high at 35,625.40. And our colleagues at Dow Jones Market Data said that the index’s performance so far represents the best start to October since, 2015.
The S&P 500 is off 1.45% from its record high at 4,536.95 and the Nasdaq Composite is 3.1% of from its Sept. 7 all-time high finish at 15,374.33.
It is very early days, with only 8% of the S&P 500 index companies reporting third-quarter results thus far, but at least 80% of companies are beating expectations on earnings and revenue, according to John Butters, FactSet’s senior earnings analyst.
Butters says that the blended growth rate (estimates and actual results) of reporting S&P 500 companies is 30%, which would, if it holds, represent the earnings growth rate in over a decade.
On top of that, the blended net profit margin of 12.3% would mark the third-highest recorded by FactSet since it began tracking that metric in 2008. On June 30, the estimated net profit margin for the third quarter was 12%.
It certainly didn’t hurt that JPMorgan Chase Goldman Sachs Bank of America Citigroup Wells Fargo and Morgan Stanley some of the biggest banks in the country, bested earnings estimates, Butters said.
To be sure, it isn’t as if an all-clear signal has sounded for the bulls, with investors still harboring agita centered on surging inflation, stagflation, the Evergrande-fueled China property saga and an ongoing energy crisis, among other concerns.
However, the drift higher in U.S. stocks has defied the gravitational pull of those bearish factors. Maybe bulls can thank investor and market prognosticator Dennis Gartman, who after a particularly bad day in October declared the bull market dead.
That prediction may yet turn out to be true but market analyst and founder of NorthmanTrader.com, Sven Henrich, was’t going to miss the opportunity to rib Gartman.
However, the market is far from out of the woods. The Federal Reserve seems poised to start tapering its monthly purchases of Treasurys and mortgage-backed securities.
And MarketWatch’s Vivien…
Read More: The Dow is on track for its best October in 6 years and third-quarter