The stock market has had a great run, returning over 35% since its tariff-driven sell-off in April. With those gains, many are, unsurprisingly, wondering if the S&P 500, Nasdaq, and Dow Jones will continue their winning ways in October.
Investors are right to be curious. October is a bit notorious because the month is home to some pretty dramatic sell-offs.
For instance, on Oct. 19, 1987, the S&P 500 recorded an eye-poppingly scary 20.5% single-day selloff, and the benchmark index tumbled over 16% in October of 2008 into the teeth of the Great Recession.
Given those major market selloffs, it’s little wonder that investors get antsy as the calendar shifts to fall. Stocks took a drubbing on Friday, Oct. 10, with the S&P 500 falling 2.7%—its steepest drop since April—on news President Trump has slapped an additional 100% tariff on China, restarting the trade war.
2024: -0.99%
2023: -2.20%
2022: 7.99%
2021: 6.91%
2020: -2.77%
Which brings us to today’s trivia question:
What percentage of Octobers since 1950 has the S&P 500 finished the month higher?
Choice 1: 43%
Choice 2: 59%
Choice 3: 67%
October can be a tricky month for stock market returns.Image source: Michael M. Santiago/Getty Images
If you chose 59%, congratulations!
While October has a penchant for some remarkable drawdowns, it can often produce significant market turning points as losses set the stage for gains later in the year.
Overall, the Stock Trader’s Almanac reports that the S&P 500 has gained ground 59% of the time in October since 1950, generating an average 0.9% return. That’s good enough to rank it the 7th best month for S&P 500 returns.
The returns, however, are relatively tepid compared to other months like November, the best month historically for the market. November is up 69% of the time, returning an average of 1.9%.
Of course, nothing in the market is guaranteed, and as we all have heard many times, the past doesn’t guarantee the future.
October is a great time to buy
Nevertheless, October’s historical returns suggest that if the market continues to retreat, it may not last long, given that November, December, and January are typically strong months for historical S&P 500 returns. For this reason, many view October swoons as a buy-the-dip opportunity.
While the odds favor buying weakness in October, there are certainly headwinds that could affect stocks this time around.
The S&P 500 is arguably richly valued, given the index’s price-to-earnings ratio (p/e ratio) is 22.8, a level that’s historically preceded lackluster returns.
There’s also the ongoing risk that a re-escalation of the trade war with China spills over, forcing investors to reconsider corporate revenue and earnings growth. President Trump is likely using his 100% tariffs as a bargaining chip that can be removed if China’s President Xi plays ball on rare earth exports. Still, if a tariff tit-for-tat proves longer-lasting we could see stocks lose more ground.
Finally, cracks in the economic armor are appearing, mostly in jobs data. The unemployment rate was 4.3% in August, the highest since 2021, and while we don’t have September data because of the shutdown in D.C., Bank of America and ADP payrolls data suggests the jobs picture worsened last month.
This weakness, however, is the core reason behind the Fed’s cutting interest rates in September by one quarter percentage point. And its likely the Fed reduces rates by another quarter-point on Oct. 29. The CME’s FedWatch tool currently puts the odds of a 0.25% cut at 98%.
A rate cut would help borrowers and is generally good for corporate profits because it lowers interest payments. However, if those cuts aren’t enough, a slowing economy –and worries ahead of that happening — could be a stiff headwind for more gains.
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This story was originally reported by TheStreet on Oct 11, 2025, where it first appeared in the Investing News & Strategies section. Add TheStreet as a Preferred Source by clicking here.
