What We May Expect in October Ahead of the Election

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.

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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.

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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.

IMPORTANT DISCLOSURES

Past performance is no guarantee of future results. All indexes are unmanaged and cannot be invested into directly.

The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or recommendations for any individual security.
The economic forecasts set forth in the presentation may not develop as predicted.

Investing in stock includes numerous specific risks including: the fluctuation of dividend, loss of principal and potential illiquidity of the investment in a falling market.

The S&P 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

This research material has been prepared by LPL Financial LLC.

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Tracking # 1-541438 (Exp. 10/17)