Good Riddance, October

Well, it’s a good thing that October is over. In the end, the S&P 500 Index lost 6.9%, for the worst month since September 2011.

Here are some of the highlights—or lowlights—from the month:

  • Besides being the worst month for the S&P 500 in seven years, the Dow Jones Industrial Average lost 5.1% for its worst month since January 2016, while the Nasdaq’s -9.2% return marked its worst month since November 2008. The big loser was small caps though, as the Russell 2000 Index fell 10.9%, its worst month since September 2011.
  • The six-month win streak for the S&P 500 is officially over. Want some good news? Since 1990, it has had 10 other 6-month win streaks, and the index was higher every single time 12 months later, up 13.6% on average.
  • The S&P 500 fell 16 days during the month, tying the most down days for any one month since October 2008.
  • The first back-to-back up days for the S&P 500 took place on the final two trading days of the month, with the index gaining more than 1% each day. This occurred nearly right on cue, as the end of the month tends to see the best moves.

Stocks Tend to Bounce the Last Part of October

  • In fact, the S&P 500 had gone 28 consecutive trading days without back-to-back up days. As our LPL Chart of the Day shows, that tied the longest streak going back to the Great Depression. That sums up how persistent the selling has been recently.

This Tied the Longest Streak Without Back-to-Back Up Days Since the Great Depression

  • After not a single 1% move up or down during the entire third quarter, the S&P 500 saw 10 changes of at least 1% up or down last month. That was the most for any month since 12 changes back in February 2018. October even had four changes of at least 2%, for the most since January 2016.
  • Lastly, turning to the Dow, in terms of the cumulative intraday range for the Dow during October, it moved a total of 9,872 points. Only February 2018 and October 2008 had larger movements.

“October was a rough ride, and most investors are likely quite happy to wave it goodbye. The good news remains that valuations are the lowest they’ve been in years, earnings continue to surprise to the upside, and November and December during a midterm year are historically quite strong,” summarized LPL Senior Market Strategist Ryan Detrick.

Gains During a Midterm Year Tended to Happen Late

For more on late year midterm strength, please read here and here.

We will take a closer look at the chance of a year-end rally in next week’s Weekly Market Commentary.

 

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