Stocks have bounced off the late October lows as we head into the historically bullish month of November. Markets are reacting favorably ahead of the Fed’s latest rate-policy decision set for this afternoon, with a continued pause essentially a done deal. Rate probabilities are showing a roughly 99% chance that the Fed maintains the current target range. Investors will be keying in on Fed Chairman Jerome Powell’s commentary during the usual post-meeting press conference.

Powell has recently struck a balance between further tightening and remaining patient as more economic data rolls in. Back in October, the Chairman promised to “proceed carefully” with any additional rate hikes at a widely anticipated speech at the Economic Club of New York. Still, he was unwavering in pursuing the central bank’s mandate of price stability.

“While the path is likely to be bumpy and take some time, my colleagues and I are united in our commitment to bringing inflation down sustainably to 2 percent,” Powell stated.

An economy that grew by nearly 5% in the third quarter is helping to keep rates high. We’ll likely need to see some forms of economic weakness (including a softening job market) in order for the Fed to become more dovish and cut rates. ADP’s employment report this morning showed the U.S. economy added just 113,000 jobs in October, below the 150k estimate. The more widely-followed U.S. employment report will be released Friday morning.

Q3 Earnings Paint a Resilient Picture

The third-quarter earnings season has come in above expectations. Through the end of last week, we received results from 246 S&P 500 members (or 49.2% of the total membership). Earnings for these companies are up 6% from the same period last year on 2.1% higher revenues.

More than 1,100 companies are set to report this week, including 159 S&P 500 members. Expectations for Q3 have evolved in a bullish manner, with earnings now projected to grow 1.2% from the year-ago period on 1.2% higher revenues. This would mark the first quarter that earnings growth has turned positive after contracting during the last three consecutive quarters, potentially putting an end to the corporate earnings recession.

Stocks are rising in the early going on Wednesday after chip giant Advanced Micro Devices (AMD Quick QuoteAMD - Free Report) beat third-quarter estimates on both the top and bottom lines. Adjusted earnings of $0.70/share beat the $0.68/share Zacks Consensus Estimate, while revenues of $5.8 billion also edged by estimates.

Advanced Micro Devices is currently a Zacks Rank #3 (Hold). The company has a long track record of exceeding earnings estimates. AMD shares rose more than 4% Wednesday morning; the stock has surged nearly 60% this year.

Image Source: Zacks Investment Research

More positive earnings beats may at the very least provide a temporary shield from the selling pressure we have experienced over the past few months. With prominent companies such as Apple due to report quarterly results in the next few days, the month of November may bring a much-needed reprieve if earnings continue to show resilience.

What to Do Now

The conflicting forces of a better-than-expected earnings season amid weak market action have contributed to investor uncertainty. Market participants will be looking for Powell to provide some answers around the future interest rate path, but the Chairman may stick to a more hawkish tone given strong economic data in recent weeks.

Still, investors should have their watchlists ready to go as markets look to turn the corner. We have entered a favorable period from a seasonal perspective. A host of sectors including real estate, financials, and consumer staples are showing some signs of life as they begin to rally from oversold levels.

Make sure you’re taking advantage of all that Zacks has to offer as we head deeper into the fourth quarter. Keep an eye on stocks this afternoon as the rate decision and ensuing press conference typically bring enhanced volatility.