Bad news for the US economy.
A drop in the Institute for Supply Management's gauge of factory activity suggested the US economy may be faltering.
Good news for the stock market.
A faltering economy means the US Federal Reserve may not be as aggressive with its interest rate hikes.
Overnight on Wall Street, the S&P 500 index soared 2.6% higher, its best session since July. This came after a diabolical September on Wall Street, the worst in two decades.
Was this a dead-cat bounce amidst an ongoing bear market?
Place your bets, Foolish investors.
In the green corner we have Matt Maley, chief market strategist at Miller Tabak + Co.
"The market is oversold, and sentiment is extremely negative, so a bounce…even a sharp one…could happen at any time," wrote Maley as reported on Bloomberg.
And in the red corner, we also have Maley, quoted in the same Bloomberg report as saying…
"However, we see lower-lows before the ultimate bottom is reached for this bear market… as the stock market has not fully priced-in a recession."
If there is to be a next leg down in the stock market, you feel like it could come sooner rather than later.
Comments like these in the AFR from Federal Reserve Bank of New York president John Williams have previously sent the stock market into a spin…
"My view is we still have a significant ways to go," he said, pointing to projections showing Fed officials expected to raise their benchmark interest rate to 4.6% by the end of next year, from its current level just above 3%.
Not today though. It's a welcome relief for beleaguered stock market investors like you and me.
Like a compliant puppy dog, the ASX 200 is following Wall Street higher, soaring 236 points or 3.67% higher to 6693. This comes after a horror September where the benchmark index fell 7.3%.
Mining stocks led the charge higher, with lithium explorer Sayona Mining (ASX: SYA) the best ASX 200 performer, gaining 14.22% to 25.7 cents on the back of a general market rebound and the announcement of a pre-feasibility study (PFS) to look at the potential production of lithium carbonate at the North American Lithium (NAL) operation.
Capitalised at over $2 billion, Sayona Mining generated $0 in mining revenue in FY22 as it works towards "becoming a leading integrated producer and the largest in North America, amid accelerating demand from the battery and electric vehicle sector," according to managing director Brett Lynch.
Potential indeed.
BREAKING
In breaking news, the RBA has added fuel to today's stock market rally by only raising the cash rate by 25 basis points to 2.6%.
The consensus amongst economists expected another 50 basis rise, reminding us once more of the old joke that economists have predicted six of the last two recessions. Or the change in central bank interest rates.
The RBA did say it still expects to increase interest rates further in the period ahead. But the slowing of the rate gains is the best case scenario in the short term for the stock market and the economy, assuming inflation can ultimately be tamed.
For the emboldened investor, the good news is that the year-long sell-off has left us with plenty of bargains to choose from, especially amongst the bombed-out small cap stocks.
