Dow and S&P 500 notch 7th straight monthly gain as stocks close out strong October

  • The S&P 500 and the Dow Jones industrial average rose 2.2 percent and 4.3 percent, respectively, in October.
  • The Nasdaq, meanwhile, gained 3.6 percent, and is on track to post its fourth straight monthly gain.

U.S. stocks rose slightly on Tuesday, the final trading day of the month, and posted another solid monthly gain.

The S&P 500 and the Dow Jones industrial average rose 2.2 percent and 4.3 percent, respectively, in October. The two indexes also notched their seventh straight monthly gain. October has historically been one of the most turbulent months for stocks.

The S&P 500 "ends October in much better shape than many had anticipated. Price action remains strong, as do the upcoming seasonals," Frank Cappelleri, executive director at Instinet, said in a note Tuesday.

More than half of the S&P 500's gains came from just five stocks, however, according to Standard & Poor's: Facebook, Amazon, Apple, Google-parent Alphabet and Microsoft. All of these companies, except for Apple, have already reported blockbuster quarterly earnings, sending their shares higher (Apple will release its latest quarterly figures Thursday after the close).

These stocks have also helped lift the Nasdaq composite 3.6 percent in October. The index recorded its fourth straight monthly gain and closed at a record high.

Overall, tech stocks had a great month. The sector gained 7.7 percent in October, its best monthly gain since July 2016.

Wall Street will start off November staring down several key events. First, the Federal Reserve is scheduled to announce its latest monetary policy decision on Wednesday.

However, most investors are not expecting any changes in policy. Market expectations for a Fed rate hike Wednesday are just 2 percent, according to the CME Group's FedWatch tool. Rather, the Fed is expected to raise rates in December.

"The Fed is likely to continue on its gradual tightening path, but so far this tightening has had little effect on longer-term rates," said Jason Pride, director of investment strategy at Glenmede, in a note.

"Demand for longer-term debt has been strong enough to offset the Fed's efforts so far, as the aging global population has driven increased need for fixed income investments," Pride said.

Speaking of the Fed, President Donald Trump is scheduled to announce his pick to be the next head of the central bank on Thursday. Fed Governor Jerome Powell is likely to be named the next Fed chair.

Meanwhile, the Bureau of Labor Statistics is scheduled to release its latest monthly jobs report. Economists polled by Reuters expect the U.S. economy to have added 310,000 jobs last month in a sharp rebound from September's 33,000 jobs loss.

Investors are also awaiting the release of a tax bill from Congress this week. President Donald Trump touted this as "the biggest tax event in the history of our country" on Tuesday.

Market expectations for tax reform have recently picked up after the House passed a budget plan backed by the Senate last week. These expectations have helped stocks reach new all-time highs.

Wall Street will also watch the latter part of the earnings season unfold. As of Tuesday morning, 73 percent of the companies that have reported have surpassed earnings expectations, while 66 percent have surpassed sales estimates, according to Thomson Reuters I/B/E/S.

More than half of the S&P 500 has already reported quarterly results.

Snack maker Mondelez and Kellogg were among the best performers in the S&P 500 on Tuesday, after both companies reported better-than-expected results. Both stocks rose more than 6 percent.

The S&P 500 rose 0.1 percent Tuesday to close at 2,575.26, with consumer staples leading advancers. But the index's gains were capped by a sharp decline in Under Armour.

Under Armour Class A shares tumbled 23.7 percent. The sports apparel retailer posted mixed quarterly results — beating earnings estimates and missing revenue expectations — but also cut its full-year guidance.

"Earnings have been solid but not spectacular," said Kate Warne, investment strategist at Edward Jones. She also noted that the "companies that have missed have not been an indication of something broader."

"For example, GE's results are not a bellwether for the broader market," Warne said.

—CNBC's Gina Francolla and Chris Hayes contributed to this report.