October 16, 2019
“History doesn’t repeat itself, but it often rhymes.” — Mark Twain
Stocks have continued their surprising strength in October, thanks to a potential thaw in the U.S.-China trade dispute. And remember, the S&P 500 Index has been lower in October during a pre-election year only once since 1987. Additionally, over the past 20 years, October has been the third-best month on average for the S&P 500. October has had a bad rap due to some spectacular crashes, but the truth is the month usually is pretty good for stocks.
“The calendar could be about to turn into a bull’s best friend, as late October has been when stocks historically started their end-of-year rally,” explained LPL Financial Senior Market Strategist Ryan Detrick. “No two years are ever the same, and we all remember last year’s sell-off. However, a better than expected earnings season, coupled with positive steps on trade and one more Federal Reserve rate cut this year could allow bulls to smile the rest of 2019.”
As shown in the LPL Chart of the Day, we are very near the historically strong end of year for equities. Whether you look at the average year or a pre-election year, stocks have tended to deliver an upward bias starting soon.
Look for next week’s Weekly Market Commentary on lpl.com and the Resource Center for more analysis on fourth-quarter stock market seasonality.
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