October Stocks Rebound from Bear Market Low

Market Recap

Stocks rallied across the board today, led by Tech Stocks and SmallCaps.  Consumer Confidence was down slightly, but that had no effect on the markets, which kept chugging north throughout the day.

All eyes are on Alphabet (GOOG) and Microsoft (MSFT), which report after the Closing Bell.

S&P 500 Adds to mid-October Rebound from Bear Market Low

By Noel Randewich

(Reuters) – The S&P 500’s over 1% surge on Tuesday adds to two weeks of strong gains as investors speculate that third-quarter earnings reports could help pull the market out of its downturn.

Apple, Tesla and other tech-related stocks drove Wall Street higher, with Microsoft and Alphabet each adding about 1% ahead of their quarterly reports after the bell as investors bet that a relatively strong start to third-quarter earnings season will continue.

With its latest rise, the S&P 500 is up about 8% from its closing low on Oct. 12, and a close at its current level would mark the index’s third largest gain from a low so far in 2022’s bear market. Tuesday’s gains put the S&P 500 about 10% above its intra-day low on Oct. 13. (Graphic: S&P 500 recoveries from bear market lows, https://graphics.reuters.com/USA-STOCKS/BEAR/xmvjkgrogpr/chart.png)

Over 280 days have passed between the S&P 500’s record high and its most recent low. That compares to 33 days that the S&P 500 took in 2020 to fall from its record high close to its lowpoint as global markets reeled because of disruptions caused by the coronavirus pandemic. (Graphic: S&P 500 bear markets, https://fingfx.thomsonreuters.com/gfx/mkt/zgpobwkmzvd/Pasted%20image%201666721196292.png)

This year’s selloff has dragged the S&P 500’s forward earnings valuation down from a historically high 21 to about 15, just below its 10-year average of 17, according to Refinitiv data.

Earnings expectations have also sunk this year, with analysts on average expecting S&P 500 companies to increase their adjusted earnings per share by 6.8% in 2022. That compares to an estimate of 9.5% in July. (Graphic: S&P 500’s forward PE dips below 10-year average, https://fingfx.thomsonreuters.com/gfx/mkt/klpygedkwpg/Pasted%20image%201666721482856.png)

Still, third-quarter earnings season so far has been better than expected, with nearly three quarters of the 129 companies in the S&P 500 exceeding earnings per share estimates, according to Refinitiv data.

Following this year’s rout, several sectors this month are showing signs of recovery. (Graphic: Every S&P 500 stock’s performance in October, https://fingfx.thomsonreuters.com/gfx/mkt/zjvqjqwjxpx/Pasted%20image%201666721787433.png)

With Amazon, Microsoft, Tesla, Nvidia and other tech-related heavyweights still badly bruised in 2022, the S&P 500 growth index’s performance is far below the value index, which reflects smaller losses in sectors ranging from industrials to consumer staples. (Graphic: Growth loses out to value, https://graphics.reuters.com/USA-STOCKS/BEAR/xmvjkgrogpr/chart.png)

(Reporting by Noel Randewich; editing by Grant McCool)

Tuesday Closing Bell, October 25 (4 PM ET)