As long as it’s not an election year in the U.S., LPL Financial says October is usually a good month for the stock market.
In October, the S&P 500 SPX -0.93% returned about 0.7%. This means that the main stock index has gained about 0.7% in years when there has been no election.
The equity measure, on the other hand, changes a lot during election years. Since 1950, it has dropped an average of 0.8% during those years.
One thing that could go wrong with this October showing is that midterm election years are usually pretty good for stocks. On average, the S&P 500 gains 3% during these years.
George Smith, portfolio analyst for LPL Financial, says, “October hasn’t been a scary month for stocks in general. Over longer periods of time, the S&P 500 has produced an average return of almost 1%.”
LPL data also shows that October has had an average gain of 1.6% over the last 10 years and a gain of 2.4% over the last five years.
But Smith said it’s not a surprise that stocks tend to fall and volatility rises in October before an election because “markets crave certainty” and “there is a high degree of uncertainty in the weeks leading up to presidential (and House and Senate) elections.”
Statista says that the S&P 500 was up 19.7% for the year as of Tuesday. The Dow Jones Industrial Average DJIA -0.41% was up 11.9%, and the Nasdaq Composite Index COMP -1.53% was up 19.3%.
