Stocks on Wall Street rose Friday, adding a small gain to what was already the S&P 500’s best month this year after strong earnings reports in October helped calm investors’ nerves.
For the month, the S&P 500 gained 6.9 percent — its best showing since November, when stocks jumped more than 10 percent in the wake of the presidential election in the United States and as drug companies reported promising results for their coronavirus vaccine candidates. The index rose 0.2 percent on Friday.
October’s rally came as investors shook off a number of concerns that had dogged Wall Street just a month prior. In September, worries that high inflation, slowing growth and supply chain logjams would lead to economic misery for American companies and consumers pulled the S&P 500 down about 4.8 percent. It was the benchmark index’s worst month of 2021.
But improving prospects on several fronts fueled the rebound. Earnings reports from the country’s biggest companies overwhelmingly came in better than investors had expected, driving gains in a number of individual stocks. Of the 244 companies in the S&P 500 to report third-quarter results as of Thursday, 82 percent have done better than Wall Street analysts had forecast, according to the data provider Refinitiv.
Large technology stocks, whose sheer size give them an outsize influence over benchmarks like the S&P 500, rallied as well. Microsoft rose more than 17 percent and Alphabet climbed 11 percent in the month after reporting solid financial results. And a deal to sell 100,000 of its electric cars to the rental company Hertz pushed Tesla’s stock value beyond $1 trillion for the first time.
As oil prices continued to rise, energy companies also profited. On Friday, Exxon Mobil and Chevron both reported a third-consecutive quarterly profit of more than $6 billion. Exxon Mobil’s shares climbed nearly 10 percent in October, and Chevron’s gained close to 13 percent.
Not every report was so upbeat. On Friday, shares of Amazon tumbled 2.2 percent after the company reported its slowest sales growth in almost seven years as the pandemic-fueled surge in online shopping eased. Apple also dropped 1.8 percent after its quarterly results fell short of expectations. Still, thanks to gains earlier in the month, both stocks ended October higher.
Investors were also encouraged by signs of progress among Democrats in Washington toward an agreement on a spending plan. On Thursday, President Biden said the party was coalescing around a $1.85 trillion economic and environmental spending bill — although it remained far from certain that an agreement would take shape.
If it does, though, it would pave the way for approval of a separate $1 trillion infrastructure spending bill that has bipartisan support. Hopes for a surge in infrastructure spending lifted shares of construction and materials companies that would benefit from it.
It helped, too, that the coronavirus surge driven by the Delta variant began to fade, with the number of cases in the United States falling by more than half by the end of October.
Understand the Supply Chain Crisis
Wall Street also has been concerned about rising prices, and though inflation remains high, several recent measures of price gains somewhat eased concerns about the continuing increases. The Producer Price Index, a measure of wholesale prices that is likely to filter through to consumers in the following months, rose less quickly than expected in September, and on Friday the Personal Consumption Expenditures price index, which is the Federal Reserve’s preferred inflation gauge, also signaled that prices were increasing less quickly on a month-to-month basis than they did over the summer.
Fast-rising prices could prompt the Fed to begin to pull back on its monetary support for the economy, including by eventually raising interest rates. That could hurt risky investments like stocks. So it also helped that some economic data highlighted ongoing risks to the economy, something that might keep the Fed from moving too quickly, said Fiona Cincotta, senior financial markets analyst at Forex.com.
For example, in part because of supply chain bottlenecks, the U.S. economy grew just 0.5 percent in the third quarter, the weakest growth since the recovery from the pandemic began, the government said on Thursday.
“If you raise interest rates too quickly, the economic recovery could come to a standstill,” Ms. Cincotta said.
The Fed has made it clear it is not planning to raise its benchmark interest rate — the strongest tool it has to affect the economy — anytime soon. But it is expected to begin winding down a bond-buying program that has been in place since early in the pandemic. That program has helped keep cash flowing through the economy.
Read More: Wall Street’s climb makes October the best month for stocks this year.