Wall Street rallies

Source: Agencies  |   2008-11-1  |     ONLINE EDITION

THE US stock market closed out a horrendous October, its worst month in 21 years, with a big advance yesterday as more investors took chances on stocks turned into bargains by waves of intense selling. The advance -- which gave the market its first back-to-back gains in more than a month -- fed hopes that Wall Street has indeed found a bottom.

The Dow Jones industrials rose 144 points on the day but ended the month down 14.1 percent, while the broader Standard & Poor's 500 index lost 16.9 percent during October as the stock market fell victim to investors' anguish over frozen credit markets and what looked like an inevitable recession.

But the month did end on a far more upbeat note than anyone might have expected at the height of investors' despair just weeks ago. The Dow was up 11.3 percent for the week, its best weekly performance in 34 years, while the S&P 500 index rose 10.5 percent -- a sign of stability that followed a growing sense that the series of government moves to unlock the credit markets would indeed help the economy move toward recovery.

Investors who have become used to bad economic news dealt calmly Friday with data showing a drop in consumer spending. Another reason for the advance: Mutual funds that dumped stocks furiously as the end of their fiscal year approached were finished with their selling.

While the market capped a terrible month with a strong week, it likely will need to put the presidential election next week behind it and focus on the October employment report due next Friday before committing to a direction. The jobs report should provide some insight into how long and how severe the economic downturn could be.

The market is "settling into a little bit of a holding pattern" ahead of the election and jobs report, said Craig Peckham, market strategist at Jefferies & Co. "The fear level has clearly subsided, but there's still a pervasive tone of unease."