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October historically volatile for stock markets

September 30, 2025
Reported by AI

October has long been known as a turbulent month for stock investors, marked by major historical crashes. While past data shows significant ups and downs, analysts suggest preparing for moderate volatility rather than catastrophe this year. The month often sees rebounds after initial declines.

The stock market's relationship with October is fraught with drama, earning it a nickname as the 'crash month' due to several infamous events. In 1929, the Wall Street Crash began in late October, triggering the Great Depression. Black Monday followed on October 19, 1987, when the Dow Jones Industrial Average plunged 22.6% in a single day—the largest one-day percentage drop in history. The 2008 financial crisis also intensified in October, with the S&P 500 falling sharply amid the Lehman Brothers collapse earlier that month.

Despite these shocks, October's reputation is nuanced. According to historical data from 1950 to 2023, the S&P 500 has posted an average return of 0.65% in October, making it the second-best performing month after November. The Dow Jones Industrial Average averages 0.75% gains over the same period. Volatility is high, with the VIX index—the market's 'fear gauge'—often spiking, but full-blown crashes are rare.

This year's October arrives amid elevated valuations and persistent inflation concerns. The S&P 500 trades at around 21 times forward earnings, above its long-term average of 17. Federal Reserve interest rate decisions continue to influence sentiment, with markets pricing in potential cuts later in 2024.

Analyst Michael Santoli of MarketWatch notes, 'October is typically volatile for stocks, but will you be needing a seat belt or a crash helmet?' He argues that while turbulence is likely, a severe downturn seems improbable given resilient corporate earnings and cooling inflation. 'Investors should buckle up for bumps, but not brace for impact,' Santoli adds.

Historical patterns show that October declines often precede year-end rallies. For instance, after the 1987 crash, stocks rebounded strongly by December. In 2008, the market bottomed out in March 2009, paving the way for recovery. This context suggests that while short-term pain is possible, long-term investors may find opportunities in the volatility.

Overall, October's legacy reminds investors of the market's unpredictability, but data underscores its potential for positive surprises amid the chaos.

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