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The change of the calendar to October has ushered in a vastly different tone in markets.

After taking a drubbing in September, the S&P 500 has jumped already 5.7% this month, marking its biggest two-day rally since March 2020. Canada’s S&P/TSX Composite Index has fully joined the party: after gaining 2.4% on Monday, on Tuesday it rose almost another 2.6% for its best gain in two-and-a-half years.

Key to the stock rally has been a sudden downturn in bond yields this week - especially in the U.S. - amid relatively soft American factory and U.S. job opening numbers. That has spurred speculation that cracks are starting to appear in the U.S. economy and in the inflation story, and that a Fed pivot - a move towards dialing back its aggressive interest rate hikes - could be just around the corner.

On Tuesday, a smaller-than-expected interest rate hike by the Australian central bank stirred hope that other central banks, particularly the U.S. Federal Reserve, will also be gentler tightening monetary policy going forward.

Many have also felt markets got oversold in September and were due for a bounce.

Have markets finally reached bottom, or is this once again another dead cat bounce within a well-entrenched bear market?

Here’s what market experts are saying:

Edward Moya, Senior Market Analyst, The Americas OANDA:

Wall Street sees light at the end of the Fed rate hiking tunnel and the scramble to pick up stocks is on. Investors are growing confident that the peak in rates was made last week. Stocks are posting the best two-day rally as Fed rate cut bets are also back on the table for next year and given markets were extremely oversold at the end of September.

The labor market is starting to lose its tightness. The August Jolts report [released Tuesday] showed job openings posted its first significant decline, which could be the start of data points that is needed for the Fed to pivot from their aggressive tightening stance. In August, job openings fell by more than 1.1 million, which brought the total number of available positions to 10.05 million. It looks like the ultra-tight labor market is finally showing chinks in the armor.

It is too early to say a Fed pivot is justified but if we continue to see a couple sharp drops with job openings, that will wake up the doves in the FOMC.

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Lindsey Bell, chief markets and money strategist at Ally:

Wild moves like these can be hard to digest, but they aren’t surprising. It is natural for some of the biggest up days in the market to cluster around the biggest down days. This early fourth quarter action doesn’t mean that we are out of the woods. The market has been reacting favorably on days when interest rates take a breather and when economic data isn’t as good as expected (both happened yesterday) – the old ‘bad news is good news’ thesis.

The key focus for near-term direction is what the U.S. jobs report tells us on Friday. The expectation is that the report will be goldilocks in nature – not too hot and not too cold. 250k jobs added in September would suggest the jobs market is slowing at a solid clip. Over the six months prior to September an average of 410k jobs were added each month. Wage growth is expected to decelerate to 5.1% from 5.3% in the prior six month period. To be sure, investors will remain reactionary to the report, so don’t expect a break from the whiplash soon. For the market to continue higher, the jobs data will have to be in-line with, or short of expectations.

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David Rosenberg, founder of Rosenberg Research:

Stocks were oversold and due for a bounce. ... While the rally may be extended further, we see this move as a bounce within an overall downtrend and continue to see lower lows ahead. In our view, earnings expectations remain wildly optimistic and will need to be reset to more realistic levels before a sustainable low takes hold. As Jimmy Conway said (rather angrily) at the Christmas party in Goodfellas, “what did I tell you?” The best days for equities happen in bear markets. Coming into Tuesday morning, the S&P 500 was still down 23% YTD. Yawn. ... Anyone notice we also had a +2% bounce last Wednesday and then rolled over big-time the next two sessions? The Fed isn’t pivoting because of what happened in the U.K. or the concerns over Credit Suisse for that matter. New York Fed President John Williams came right out and said [Monday] that “we still have a significant way to go” and added that policy is “not yet in a restrictive place for growth” .... Meanwhile, as mentioned above, a few non-validations regarding yesterday’s big rally: the yield curve went more inverted, high yield spreads widened, and copper fell yet again. Let’s sit and watch this thing unravel — the spike in equities was classic post-end-of-quarter buying into an oversold market. Nothing more, nothing less. Purely technical in nature.

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Mark Haefele, chief investment officer at UBS Global Wealth Management:

With sentiment toward equities already very weak, periodic rebounds are to be expected. But markets are likely to stay volatile in the near term, driven primarily by expectations around inflation and policy rates.

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Ashwin Alankar, head of Global Asset Allocation at Janus Henderson Investors:

“It’s not clear to me that you’ve seen panic yet. Until you see panic it’s not the best time to start adding risk to a portfolio at a rapid clip.”