Most major stock market indexes regained their footing in October, finishing the month significantly off  their lows set in September. The technology laden NASDAQ Composite Index (NASDAQ) was the big winner in October, regaining all the ground that it had lost after the stock market re-opened from being closed for the four days after the terrorist attacks on September 11th.

The "War on Terrorism" began in early October with the U.S. attack on Afghanistan.  The attack in October was limited to an air bombardment of our enemy. Any ground action in October was very limited in its scope.

In addition, the angst of the public was raised significantly as the news unfolded daily of the U.S. being targeted by some unknown group for bio-terrorism, and more news was released about an Anthrax attack on the postal system.

What fueled the stock market rally off its lows set in Sep

tember was unclear, as the economic and earnings news being disseminated throughout October continued to depict the U.S. economy and corporate profits  deteriorating.

One rational was that many investors embraced the thesis that since the economic news was so dismal, then certainly the worst was behind us, and now would be a great buying opportunity for many stocks that have plummeted, as economic and earnings growth were ahead.

The U.S. continued to pummel the Taliban in Afghanistan throughout November, avoiding much participation in the ground war.

Investors became more courageous throughout November as the Taliban in Afghanistan continued to lose their foothold on much of the territory that they controlled.

Perhaps, many investors felt more reassured that the terrorist threats in the U.S. was over,

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as the Taliban continued to be beaten down.

Most major stock market indexes  continued to climb throughout November, albeit, closing the month still significantly in negative territory for 2001.

The economic news being released to the public in November continued to depict the U.S. economy continuing to decline.

Bond investors got spooked in November, fearing a robust recovery, as professed by many economists to begin in early 2002. Most bond classes and maturities lost ground in November as investors sold off bonds with a passion, pushing up interest rates.

You  would  think that  bond investors would have embraced the
news  being  released in November    depicting    wholesale   and
retail prices continuing their free-fall  in  October.

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