On Oct 16, Wall Street rebounded from the rout it suffered in the last week. All three major stock indexes – the Dow, S&P 500 and Nasdaq Composite — closed significantly higher, marking their biggest single-day gain since Mar 26. This is a clear indication that the stock market meltdown in October was transitory in nature.

A robust U.S. economy buoyed by a series of strong data released recently, solid labor market and strong earnings momentum will pave the way for long-term growth of stock markets. At this stage, investment in good growth stocks with favorable Zacks Rank will be a prudent move.

Robust U.S. Economic Fundamentals

The U.S. GDP grew at 3.2% in the first half of 2018, better than the Trump administration’s target level of 3%. In the second quarter alone, U.S. GDP grew at 4.2%, marking its highest gain since the third quarter of 2014 and the third-best growth rate since 2008.

On Sep 26, the Federal Reserve raised forecast for 2018 and 2019 GDP growth from the 2.8% and 2.4% stated in June to 3.1% and 2.5%, respectively. The central bank’s latest GDP estimate also indicates that economic growth will remain stable throughout this year. The primary catalyst behind these positive revisions is the direct impact of tax cuts.

Healthy Labor Market

The U.S. unemployment rate in September was 3.7%, its lowest level since December 1969. On Oct 16, the Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) reported that job openings in the month of August reached an all-time high of 7.14. Total number of hiring by the U.S. corporates also attained a record high of 5.78 million.

Average wage rate increased 0.5% in August, the fastest pace since January. Despite wage hike, the core PCE index (excluding food and energy) in August – Fed’s preferred gauge of inflation measure – remained steady at 2%.

Strong Consumer and Business Sentiments

The Conference Board reported that the U.S. consumer confidence index for the month of August jumped to 133.4, marking its highest reading since October 2000. The ISM reported that the U.S. manufacturing index for the month of September was pegged at 59.8. Notably, any reading above 50 indicates overall growth of the manufacturing sector. Manufacturing sector constitutes nearly 12% of the U.S. GDP.