Will the artificial intelligence rally continue in the stock markets in November?

The Background of the Rise in the Stock Market

Wall Street continues to instill hope in investors by closing October with a strong rally. The S&P 500 index is maintaining an impressive upward trend led by artificial intelligence. Throughout the year, the index has gained approximately 17 trillion dollars in value, sustaining the positive atmosphere in the markets. Current data shows that, despite fluctuating tides, there are no signs of fatigue in the stock markets.

Performance of the Indices in October

In Friday's session, stock indices exhibited different performances. The Dow Jones rose by 0.09% to reach 47,562 points, while the S&P 500 increased by 0.26% to 6,840 points. The Nasdaq gained 0.61%, climbing to 23,724 points. On a weekly basis, both the Dow and the S&P 500 recorded an increase of about 1%, while the Nasdaq saw a rise of more than 2%. In October, despite overall volatility, both the Dow and S&P 500 indices saw over a 2% increase, with the Nasdaq approaching a 5% rise. This indicates that the Dow is experiencing its sixth consecutive month of gains, while the S&P 500 is on its longest winning streak since 2021.

Artificial Intelligence and Investor Confidence

The strongest factor behind this rise in the stock market is the way the artificial intelligence narrative has boosted investor confidence. Expectations regarding Federal Reserve interest rate cuts and strong corporate earnings have directed investors' attention towards AI-focused companies. Mark Hackett and Mark Hefel share the view that AI-related stocks will continue to lead and emphasize the need to diversify investment portfolios. Ryan Grabinski notes that the topic of artificial intelligence is not limited to tech giants but is also making its impact felt across other sectors.

Positive Outlook for Major Tech Companies

Despite existing concerns about the future of the AI-centric technology sector, a steady increase in company profits is alleviating these worries. Recent earnings seasons have shown that tech giants are allocating more budget to AI investments. Capital expenditures are expected to exceed 380 billion dollars by 2025. Particularly, the positive results from Amazon and Apple are contributing to a rapid recovery in technology stocks. The "Magnificent Seven" basket gained 1.5%, continuing its rise throughout 2023, while ADM stocks recorded their highest monthly growth since 2001.

Stability in the Bond Market

Jerome Powell's comments softening expectations for potential interest rate cuts in December have kept bond yields stable. The yield on 10-year treasuries remains steady at 4.09%, while a slight decline in 2-year yields has been observed.

Positive Forecasts for November

The trade truce between the U.S. and China and solid corporate performance have led analysts to make positive forecasts for November. Historical data shows that November is generally a productive period for U.S. stocks. The S&P 500 is currently trading at about 23 times the expected earnings, raising questions about whether the upward trend will continue until the end of the year. As a result, this rise shaped around artificial intelligence holds the potential for increased investor confidence, allowing the markets to reach new heights.