Wall Street on Thursday locked in its first winning month since spring and the Dow Jones industrials' second-best October on record. But the market struggled late in the session, hurt by a plunge in health-care stocks triggered by fraud allegations.
Stocks still managed to finish mostly higher, despite more data suggesting the economy is losing momentum. Those reports drove Treasury bond yields sharply lower again.
The Dow closed with a loss of 30.38 points, or 0.4%, at 8,397.03, while the Nasdaq composite inched up 3.02 points, or 0.2%, to 1,329.75.
Winners topped losers by 18 to 14 on the New York Stock Exchange and by 17 to 16 on Nasdaq, in active trading.
For the month, the Dow rose 10.6%, second only to the 13.8% gain of January 1987. The Nasdaq rose 13.5% in October while the Standard & Poor's 500 advanced 8.7%.
The last time Wall Street's main gauges posted monthly gains was March.
Stocks hit five-year lows early in October, then rocketed amid better-than-expected corporate earnings reports.
"What is important to remember is that October has frequently been a bear market killer," said Alan Ackerman, executive vice president at Fahnestock & Co.
Since World War II, a number of major market declines have ended in October, including the bear market of 1990 that was triggered by imminent war between the United States and Iraq.
Still, stock prices have a long way to go to wipe out the year's losses. The Dow has a year-to-date loss of 16.2%, while Nasdaq is down 31.8% and the S&P is off 22.9%.
Thursday's economic reports showed a rise in jobless-benefit claims and a decline in Chicago-area manufacturing activity.
The government today will report on October employment trends. A weak report could further boost expectations that the Federal Reserve will cut short-term interest rates when policymakers meet on Wednesday.
Ed McKelvey, senior U.S. economist at Goldman Sachs Group, said the Fed may cut half a point from its key short-term rate, now at 1.75%.
Investors and traders in the Treasury bond market appeared to place new bets that the Fed will indeed cut rates.
The yield on the two-year T-note fell to 1.67% from 1.74% Wednesday.
That has returned the rate to the generational low it hit Oct. 9, before market yields rebounded in mid-October.
The yield on the 10-year T-note fell to 3.90% from 3.96% Wednesday. It now is the lowest since Oct. 14.
