A U.S. reading today showed manufacturing remained stuck in neutral in October as factories struggled with dwindling overseas demand and well-stocked customers at home. Official data earlier showed Chinese factory output shrank for a third month, contrasting with a report signaling a pickup in euro-area manufacturing.

The October payrolls report due on Friday will begin to loom larger on investor sentiment as the week progresses. Economists surveyed by Bloomberg project the economy added 182,000 jobs last month, up from Septembers 142,000, with the unemployment rate slipping to 5 percent from 5.1 percent a month earlier.

Comments from the Federal Reserve last week boosted prospects for an interest-rate increase this year, with investors closely watching data for signs of whether the economy can withstand higher borrowing costs. Traders are pricing in 50 percent odds for a December liftoff, up from 34 percent before the Fed’s most recent policy meeting.

Equities rallied the most since 2011 in October and are riding their longest streak of weekly gains since December, bolstered in part by central banks as the Fed kept rates pinned near zero, while signs of weak growth prompted the European Central Bank last month to hint at potential extra measures. In Asia, China unexpectedly cut its lending rate and Bank of Japan maintained record stimulus.

The S&P 500 was up nearly 13 percent from an August low as equities recover from a third-quarter swoon triggered by concern that weakening growth in China would spread. An earnings season that hasn’t been as bad as analysts initially predicted also helped the benchmark erase a loss for the year.

David Fuller's view

Interestingly, the leading Nasdaq 100 Index (weekly & monthly) reached a new high for the year today, although it has not quite taken out its all-time accelerated peak in March 2000.  Needless to say, this move is better supported by considerably lower valuations and the more orderly advance, albeit now a little overextended having commenced its sixth consecutive week of gains today.

Other important US Indices such as the Nasdaq Composite, S&P 500 and Dow Jones industrial Average are also approaching their highs.  We can expect some reaction and consolidation before long but more importantly, these recoveries confirm that Wall Street’s bull market has seen no more than an overdue correction.  November is the first month of a seasonally favourable period for stock markets, on average, which often extends through May.