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After suffering the first ‘correction’ in the past year in September (falling almost 5%), stocks snapped back in October, getting an early jump on the traditional year end rally. The fuel for the gains were the exceptionally strong earnings reports, which started with the major U.S. money centre banks and finishing the month with big earnings beats from the major tech players such as Microsoft and Alphabet. Stocks generated sharp gains for the major averages with the TSX up 4.8% while, in the U.S., the S&P500 gained almost 7%, on notable strength in the transportation and technology sectors. In Canada, energy lead the charge again in October as oil prices jumped another 8%. However, gains on both sides of the border were more ‘stock specific’ than ‘sector generalized’, depending mostly on how earnings call and outlooks were received. Classic example of this was in the auto sector, where everyone has had to shut in production due to the semi-conductor shortage, higher labour costs and supply chain issues. However, although the three biggest U.S. manufacturers beat quarterly expectations, maintained guidance for the year and delineated strong growth in electric vehicles, Tesla rose 41% for the while Ford was up 21% but GM only gained 3%.
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