Stocks pulled off a second straight day of gains Friday, capping the market's worst month in a decade and the worst October since the crash of 1987.
Traders noted that pension funds were buying stocks to rebalance their portfolios as today is the last day of the October.
The Dow Jones Industrial Average rose 144.32, or 1.6 percent, to end at 9325.01.
The S&P 500 gained 1.5 percent, while the tech-heavy Nasdaq advanced 1.3 percent.
Indeed, there will be many a sigh of relief today as we bid adieu to October, which is typically one of the worst months of the year for the market, but this year, was one of the worst of the worst.
Not only was it one of the worst Octobers, it was the worst month in percentage terms since August 1998, when the Dow lost 15.1 percent. Thanks to the gains of the past two days, the Dow lost just 14.1 percent in October.
In point terms, the 1525.65 the Dow lost was the biggest monthly decline on record.
At its lowest point this month, Oct. 10, the Dow was down more than 27 percent for the month — enough for a bear market and then some! The Dow is now down about 34 percent from its October high of 14164.53.
And, the Dow ended today roughly where it closed on Oct. 13 when the index shot up 936 points, its biggest one-day point gain on record.
Still, it won't be all smooth sailing from here.
First, we have to get through the election on Tuesday. Then, the economy.
"There’s a lot of things not in this market," Art Cashin, director of floor operations at UBS, told CNBC. "This market is still working its way out of crisis mode. It hasn’t come to grips with the recession that’s coming up, which is not going to look like a V or a U, it’s going to look like a bathtub and that will carry us longer and further than we would care to be."
Traders shrugged off today's dismal economic data: the worst drop in consumer sentiment on record and the first drop in personal spending in two years.
The Reuters/University of Michigan gauge of consumer sentiment dropped to 57.6 in October from 70.3 in September, its steepest drop on record. However, a mid-October reading had indicated as much, so the report came as little surprise to the market.
Personal spending fell 0.3 percent, marking the first time in two years that consumers have cut their spending, even as income ticked up 0.1 percent. Spending came in as expected but economists expected a slightly higher bump in income.
Financial shares got a boost from optimism that the credit markets may be thawing.
JPMorgan jumped 9.7 percent, making it the biggest gainer on the Dow.
Electronic Arts shares tumbled 18 percent Friday after the videogame maker slashed its full-year forecast, raising concerns that a slowdown in consumer spending may slam the videogame market. Its shares tumbled nearly 20 percent.
This piled on to worries about the future for tech after Intel warned about the impact of the financial crisis.
Intel sent a ripple of worry through tech land after the chip giant said the financial crisis could have several effects on its business, including insolvencey of key suppliers, resulting in product delays, and an inability to obtain short-term financing of its operations from issuance of commercial paper. Intel said it will issue a mid-quarter update on Dec. 4 amid the murkiiness of the current environment.
Intel shares ended down just 0.9 percent.
This followed a great day — and week for techs — as analysts noted the sector will be one of the biggest beneficiaries of a recovery and some investors are starting to scour around the sector for bargains.
General Motors was the biggest drag on the Dow, falling 4.6 percent, after a deal to merge the struggling auto maker with Chrysler hit an impasseafter the White House ruled out funding for it, according to three people with direct knowledge of the talks.
Another deal may be off, with increased speculation that Google and Yahoo may be walking away from their planned search partnership, the Wall Street Journal reports. Google shares lost about a tenth of a percent, while Yahoo fell nearly 1 percent.
In earnings news, Chevron soared past forecasts, delivering earnings of $3.85 a share. Analysts had pegged earnings at $3.25 a share, according to Thomson Reuters. Its shares rose 0.6 percent.
This came a day after fellow oil giant ExxonMobil reported its biggest quarterly profit ever. Exxon shares fell 1.2 percent.
Cummins shares declined 18 percent after the company, which makes engines and power generators, said its quarterly earnings rose 24 percent as growth overseas helped offset weakness in the U.S.
Asian markets declined, capping their worst month ever, as Japan's lower-than-expected interest-rate cut snapped a three-day rally. In Europe, stocks did manage to continue the rally for a fourth straight day, boosted by oil and drug stocks and a late recovery in banks. Barclays, however, skidded after selling a stake to Middle East investors.