Wall Street ends October on a positive note, S&P records biggest monthly percentage fall in 7 years

• Technology leads the gains on the last day of the month.
• Improved sentiment weighs on defensive sectors.
• Nasdaq suffers biggest monthly percentage  drop since 2008.

Major equity indexes ended the extremely volatile month of October on a positive note but suffered heavy losses for the month nonetheless. Reflecting the risk-on mood, the CBOE Volatility Index, Wall Street’s fear gauge, dropped nearly 10% on the day. Today’s data from the United States, which revealed that the private sector employment increased by more than expected in October, provided an additional boost to the risk appetite as well.

Boosted by the decisive gains seen in the shares of the so-called FAANG Group (Facebook, Amazon, Apple, Netflix, Google), the risk-sensitive S&P 500 Technology and Communications Services indexes added 2.4% and 2.1%, respectively.  Commenting on today’s market action, “A lot of these high-growth names have really been in bear market territory because of the slump this month, but the valuation correction is allowing some of the bulls to be opportunistic and to jump in at the right moment,” Ryan Nauman, market strategist at Informa Financial Intelligence in Zephyr Cove, Nevada, told Reuters.

On the other hand, the S&P 500 Utilities and Real Estate indexes, which struggle to attract investors in a risk-positive environment, lost more than 1% to cap the upside.

The Dow Jones Industrial Average added 241.12 points, or 0.97%, to 25,115.76, the S&P 500 rose 29.1 points, or 1.08%, to 2,711.73 and the Nasdaq Composite gained 144.25 points, or 2.01%, to 7,305.90.

According to the latest available data provided by Reuters, these three major indexes lost 5.08%, 6.94%, and 9.2%, respectively. These figures marked the biggest percentage fall for the DJIA since January 2016, for the S&P 500 since September 2011, and for the Nasdaq Composite since November  2008.    

DJIA technical outlook by FXStreet Chief Analyst Valeria Bednarik

The Dow eased further  after the close from an intraday high of 25,338, and the daily chart shows that it is now struggling around a flat 200 DMA, after meeting sellers around a strongly bearish 20 DMA. In the same chart, technical indicators have extended their Tuesday’s recovery but remain below their midlines, all of which falls short of anticipating further gains ahead.

Shorter term, and according to the 4 hours chart, the DJIA is above a bullish 20 SMA but failed to extend its advance beyond a bearish 100 SMA, as technical indicators retreat from nearly overbought readings, putting it at risk of extending the ongoing decline short-term.

Support levels: 25,027 – 24,951 – 24,889.

Resistance levels: 25,137 – 25,192 – 15,268.