Following August’s market rout and another slump in September, stocks have staged a dramatic comeback in October. Stocks bounced back this month following reduced chances of a rate hike. Additionally, investors have been more understanding about the fact that revenue weaknesses are attributed to a strong dollar. Stellar earnings from big tech names boosted stocks last Friday.

Markets are staging a comeback, emerging out from headwinds including weak economic reports from China and the global growth worries that had led to the Fed’s decision to keep rates unchanged.

It is likely that these positive factors will continue to propel stocks higher, obviously making it a good idea to pick growth stocks which have posted strong performances this month.   

Rate Hike Unlikely in Near Term

The Federal Reserve kept rates on hold in its September meeting. The issue has likely been further delayed following September’s soft non-farm payroll reading The U.S. economy added 142,000 jobs in September, significantly lower than the consensus estimate of 202,000. Employment gains for the previous two months were also trimmed by a combined 59,000.

The report was released on Oct 2, which was also the day that the current rally began. Since then the CBOE Volatility Index (VIX) began falling and has declined from 21 to below 15 levels. This means that markets have stabilized to a large extent.

Dovish Monetary Stance from ECB, China

ECB President Mario Draghi’s dovish comments had a positive impact on broader markets last Thursday. He indicated that the central bank could expand its quantitative easing measures at its December meeting.

Separately, the People’s Bank of China (PBOC) announced on Friday that they reduced the key rates in order to boost the economy. PBOC reduced the one-year benchmark bank lending rate and one-year benchmark deposit rate by 25 basis points to 4.35% and 1.5%, respectively, effective from Oct 24.

Revenue Weaknesses Attributed to Dollar