North American stocks rallied, showing the end of a bear market?

The US and Canadian stock markets rose on Monday as more companies reported their third-quarter earnings, which are not too gloomy. Some tech companies, including Intel, Apple, and Microsoft, beat their expectations, while Tesla missed the revenue forecast. The higher revenue of some companies is, however, associated with higher inflation which may fade away in the following quarters. S&P 500 and Nasdaq added 3.25% and 2.59% in the past five days, and Canada’s S&P/TSX is up 1.6%. S&P is now 6% higher than the bottom last week.

 

The Federal Reserve tightening to combat inflation is showing its effects, with US business activity contracting in October for the fourth straight month. Many analysts expect the markets to have finished the bear market, the housing market should show signs of recovery, and the interest rate hikes should stop. On top of that, the firm US dollar is another headwind for the equity markets and listed companies’ revenues. Hence, the recent rally could be another short-lived bear market rebound.

 

The continuous hawkishness by US central banks is putting the US and the global economy into recession, a price the officials are willing to pay to combat the wild inflation.