Markets enjoyed a month of spectacular gains powered by a strong earnings performance and hopes surrounding tax reforms. Significant progress was made on the new tax law during the month, further raising the hopes of investors.

Meanwhile, bullish tech earnings were the highlight of the third quarter earnings season characterized by notable revenue growth. The ECB cut its bond purchases but extended the duration of its monetary stimulus package.

October’s Performance

Last month, the Dow, the S&P 500 and the Nasdaq increased 4.3%, 2.2%, and 3.6%, respectively. While, the Dow and the S&P 500 posted their seventh straight month in gains, this was Nasdaq’s fourth straight monthly gain. All the three benchmarks have posted their biggest monthly rise since February. Moreover, this also happens to be the Dow’s longest streak of such gains since April 2012 and also the longest for the S&P 500 since May 2013.

Meanwhile, the House of Representatives passed a $4.1 trillion budget bill for 2018. Moreover, the House of Representatives cleared the budget blueprint with majority of the Republicans voting in favor of the move.

Further, the ECB announced plans to extend the quantitative easing program. Also, the release of the Federal Open Market Committee minutes clearly hinted at a rate hike in December. President Trump chose not to certify Iran’s compliance with a nuclear deal struck in 2015.

Dow Breaches 23,000

The Dow gained 40.48 points on Oct 17 and surpassed the 23,000 psychological milestone in midday trading for the first time. This also marked the Dow’s fastest ascent to 1,000-point milestone since mid-July. In its history spanning over a century, the Dow has registered the fourth 1,000-point increase within a year for the first time.

Economists believe that such a stellar showing by the blue-chip index has partially been due to optimism built around hopes of tax cuts after the new tax code was formulated by President Trump. Gains have also been in part due to a strong corporate earnings and broadly encouraging economic conditions.

Bullish Domestic Data

Economic data released during August was largely encouraging in nature. The ISM manufacturing index soared to 60.8% in September, up from 58.8%, marking its highest increase since 2004. ISM Services Index for September came in at 59.8%, marking its highest level since Aug 2005. Construction Spending surged 0.5% in the month of August, surpassing the consensus estimate of an increase of 0.2% for the period. With this, the index gained 2.5% from last year.

PPI for September increased by 0.4% while CPI increased by 0.5%. Retail sales in the United States for the month of September increased 1.6%, marking its highest increase in more than two years.

Consumer spending surged 1%, in September, marks its highest level in almost 8 years. Such a rally can be attributed to the fact that the residents of hurricane-ravaged Texas and Florida replaced their flood-damaged automobiles.