According to IHS Markit’s business growth saw a significant uptick in October, the best its seen since February 2019.
The IHS Markit composite output index registered at 55.5, up from 54.3, the best number it has produced in almost 9 months. The index of service industry activity also gained from 54.6 to 56, and the purchasing manager’s index for the manufacturing sector rose from 53.2 to 53.3.
The index is a gauge of month-over-month changes in activity, not a summary of overall output. A reading of 50 indicates no change in business activity, while anything above 50 is a positive change and numbers below 50 indicate an economic contraction.
Chris Williamson, HIS Markit chief business economist said that last week’s report indicates that the US economy “started the fourth quarter on a strong footing.”
Markit is almost unique in showing a V-shaped economic bounce-back due to the trend being fueled by the rebound in output. Most of the other indices of business activity indicate that economic output still remains significantly under the pre-pandemic levels.
One of the most highly watched indices of the US stock market, the S&P 500 closed on Tuesday, August 18th, at a record 3,389.78, close to 3 points above its previous high that was set last February 19th.
And the S & P 500 was not alone. The NASDAQ also climbed to a new record, passing its previous June high, while the Dow Jones Industrial Average came within just 5% of its own February peak.
After the pandemic began to negatively affect the US and world economy, the stock market took an unprecedented nosedive, losing about one third of its value. But US stocks have been on the rebound since the US central bank announced a banquet of innovative economic support directives on March 23rd.
One analyst was surprised by the speed and strength of the market’s recovery, especially since the country is still faced with a pandemic that is ravaging many locations across the country, with many businesses closing and enormous numbers of people losing their jobs.
Observers believe the recovery is partly explained by actions taken by the Federal Reserve and other kinds of stimulus plus investors who are sure the economy will eventually get back on track and see the stock market as a good place to make money on that prediction.
Driving the stock market’s positive performance are to a large extent technology stocks. Apple, Microsoft, and Amazon are among those companies that have benefited from lockdowns as people shelter at home and use their devices and internet more than ever. Cloud computing and machine learning companies have also benefited.
“We would not be flirting with all-time highs were it not for technology,” said Terry Sandven, chief equity strategist at US Bank Wealth Management.