The S&P 500 snapped its 5-month win streak with a negative October. Stocks were on track to remain relatively flat for the month until a final-day dip pushed most indices into the red. Below are the October returns for the popular benchmarks that investors track (Data provided by Y-Charts & Commonwealth Financial Network):

S&P 500 Index: -1%
Dow Jones Industrial Average: -1.3%
Nasdaq Composite Index: -0.5%
Russell 2000 Index: –1.4%
S&P Target Moderate Risk Index: -2.19%

The stock market faces several notable near-term risks in the coming weeks:

The largest companies in the world continue to report their financial results from Q3 of this year.
The U.S. Presidential Election is scheduled for Tuesday, November 5th.
The Federal Reserve will meet on Thursday, November 7th, to decide whether to maintain or reduce the current interest rate levels.

Significant uncertainty looms as we approach next week’s Presidential Election. However, our view throughout the year has been that, as long as there is a definitive winner, markets should continue their upward trend into year-end, aligning with typical election-year seasonality. Conversely, prolonged ambiguity around the election outcome could bring additional market volatility.

Reflecting back to the 2000 election between George Bush and Al Gore, the absence of a clear winner for several weeks created notable market disruption. Below is a chart illustrating the S&P 500’s weak performance following that election.

On a positive note, we have just entered the historically strongest six-month period for stocks. Since 1950, the November-April stretch has consistently outperformed all other six-month periods. Below is a graphic from our friend Ryan Detrick that highlights this trend.

The coming weeks are likely to bring a significant amount of noise. However, it’s important to remember that these events are short-term in nature. We believe they will pass, and the market will continue its long-term upward trajectory.

As always, don’t hesitate to reach out to our team with any questions you may have.