Welcome to October! Fall is in the air, football is on every weekend, pumpkins are on our doorsteps, and a highly contested U.S. presidential vote is just a few weeks away. What could it all mean? Well, for starters, fireworks are likely. The S&P 500 in October has traded in a range of 7.32%—the most of any month.
Now, what about election years? You’d think that October would see some big swings ahead of elections, but surprisingly that isn’t the case. Only the first year of the presidential cycle has a smaller average than the 6.3% range seen during an election year. Using the median range during an election, which lowers the impact of the massive 36.8% range in 2008, election years (year four) have actually the smallest range out of the four-year presidential cycle.
Why could this be? It’s possible that some years, the market is pricing in a benign outcome, or even the probability of a positive change, and there is no need for big swings in volatility. Or the relatively small sample size could mean the difference is really not all that meaningful. Be on the lookout for our Weekly Market Commentary, coming out later today, as we take a much closer look at October and the upcoming fourth quarter.
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