On Friday, the Dow average rose 97.07, or 1.1 per cent, to 8,592.10, wrapping up its best month since January 1987.
American Express, which has lost a quarter of its value since July, led the Dow's advance.
Other US stock indexes also gained, spurred by evidence that the US economy is expanding even as one-fifth of the world is in recession.
The Standard & Poor's 500 Index climbed 12.74, or 1.2 per cent, to 1,098.67, and the Nasdaq Composite Index gained 14.20, or 0.8 per cent, to 1,771.39.
The rally, which looks set to continue this week, belied October's dismal reputation as a month of crashes and panics.
The latest news on the US economy bolsters the bullish case for shares.
Gross domestic product grew at a faster than expected 3.3 per cent annual rate in the third quarter, the government said, and inflation matched its lowest reading in almost 40 years.
Sceptics are unconvinced.
"The global economy is slowing and our economy appears to be slowing [the GDP report notwithstanding]," said William Meehan, the chief market analyst at institutional broker Cantor Fitzgerald & Co in Darien, Connecticut. "We're seeing a fairly substantial decline in forward-looking consumer expectations."
In addition, he said, business are stepping up job cuts, and are expected to trim capital spending in 1999.
Still, US Treasury bonds, which tend to rise with bad news on the horizon, finished October with their worst monthly losses in more than a year.
Holders of 30-year Treasury bond suffered a loss last month of about $28 per $1,000 bond, as its yield rose 17 basis points to 5.16 per cent.
Bonds dropped on Friday after the economic growth report was announced.
Some investors and analysts said they are optimistic that bonds will recover because they expect the Federal Reserve to continue cutting interest rates to ensure unsettled markets don't result in a credit crunch that could push the economy into recession. Copyright: IOS & BloombergReuse content