Concerns about China’s economic growth and the timing of the Fed’s rate hike resulted in turmoil in the financial markets during August and September. However, the broader markets bounced back in October, which has a rather spooky reputation of not being an investor-friendly month.

China’s move to cut borrowing rates and the ECB’s hint to extend its quantitative easing program helped benchmarks post their biggest monthly gain in October in four years. Another catalyst behind October’s rise was the Fed indicating a rate hike possibility in December, provided the economy is strong enough to sustain it.

Gains in energy stocks following a strong rebound in oil prices also boosted the broader markets during the month. Strong quarterly earnings in the tech sector too helped benchmarks propel into positive territory in October following two rocky months.

Banking on the positive momentum in October, major indexes should continue their winning run in November. Moreover, history shows that from November through April each year, the financial markets have consistently outperformed returns over the period from May to October.

However, disappointing economic data continues to weigh on the broader markets. Economic data from retail sales to core durable goods all suggested that the U.S. economy is hitting a soft patch. Moreover, the third quarter U.S. GDP slowed down, while consumer spending recorded its smallest increase in September since January.  Hence, in this scenario, it will be prudent to invest in value stocks in November as they are poised to gain in value once the broader market recognizes their full potential.

Let’s now look into the factors that have boosted the markets:

China & ECB Stimulus Measures

The People’s Bank of China (PBOC) announced that they reduced the key rates in order to boost the economy, which is on the verge of recording its lowest annual growth rate of below 7% in 25 years. 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. This was the sixth time in less than a year when the bank opted for a rate cut.