October Rebound Puts Markets Back on Track

North American markets returned to their previous highs by the end of October after the brief downward trend throughout the month of September. Overall, the renewed buying helped push the TSX up almost 5% and the S&P 500 almost 7% during the month, closing out with a 4.8% and 6.9% move higher respectively. This puts us back on track with our increased annual targets for both indices to see 22,000 on the TSX and 4,800 on the S&P 500 by the end of the year. The surge in Energy stocks played a significant role in the rebound, as we predicted. In fact, we added to our Energy weighting in August and September anticipating the sector’s upside potential. There was also broad base support coming from Industrials, Real Estate, Materials, Financials, and Technology, all posting solid gains. 
 
In the U.S. October’s rally was the strongest monthly gain for the S&P500 since November 2020, essentially erasing the losses of September and setting five new all-time highs in the process. Despite the concerns of supply chain constraints, inflation, monetary/fiscal policy, and peak growth theories, the markets have once again proven its’ resilience in the face of adversity and continues to climb the wall of worry. Meanwhile, the concerns that preceded the selloff in September remain, and perhaps this will play out again early in the New Year as investor’s resolve is tested once again, but in our view the longer-term fundamentals for Canadian and U.S. equities is strong.

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