As recession fears recede, investors show an increasing willingness to bet on another interest rate cut from the Federal Reserve.
Stocks are likely to see further gains in the fourth quarter but the ride may be bumpy. "October is usually volatile, but we may see a rally in November or December," says Charles Rotblut of Zacks.com.
Shares of Hovnanian Enterprises rose after the company said it sold more than 2,100 homes during its weekend sales campaign, according to preliminary results.
Stocks ended higher as investors widely expected the Federal Reserve to cut interest rates, but gains were tempered due to uncertainty regarding the magnitude of easing. The Dow Jones Industrial Average posted a weekly gain of 2.6%, the S&P 500 rose 2.1% and the Nasdaq Composite advanced 1.4%.