Stocks traded higher for a second consecutive month after another encouraging inflation report. Investors cheered the report as fresh evidence that price pressures are easing after a period of high inflation.

Stock markets remained volatile during October, once again changing direction as investors shifted their views. After declining -9.2% during September, the S&P 500 gained +8.1% during October.

Investor hopes for a Fed pivot were one of the primary catalysts that propelled the stock market higher during July and August. Chair Powell’s recent speech at Jackson Hole dashed those hopes.

Why the change in attitude? Multiple catalysts could be causing the turnaround, one of which includes investor sentiment being too negative entering July.

Low-interest rates and bond purchases stabilized the U.S. economy during the Covid pandemic, but removing the two pandemic-era monetary policies is proving to be enormously disruptive.

Recent economic data indicates the COVID-19 recovery is moderating.