October delivers further stock market gains

October has a curious reputation rooted in market history.

The Crash of 1929 (a 13% selloff on Black Monday and 12% on Black Tuesday, according to Federal Reserve History), the Crash of 1987 (a 22% selloff in October per MarketWatch data), and the financial crisis of 2008 (a 17% decline in October) have all contributed to the month’s spooky reputation.

But does perception match reality? Since 1970, October averages a 0.91% return for the S&P 500 Index (dividends not reinvested), according to S&P 500 data from the St. Louis Federal Reserve. Between 2010 and 2024, October sports an average monthly advance of 2.13%, which is eclipsed only by November and July.

Last month’s action was generally in line with the long-term averages.

		Key Index Returns
	MTD %	YTD %
Dow Jones Industrial Average	2.5	11.8
Nasdaq Composite	4.7	22.9
S&P 500 Index	2.3	16.3
Russell 2000 Index	1.8	11.2
MSCI World ex-USA**	1.0	23.9
MSCI Emerging Markets**	4.1	30.3
Bloomberg US Agg Total Return	0.6	6.8

Source: Wall Street Journal, MSCI.com, Bloomberg, MarketWatchMTD returns: September 30, 2025–October 31, 2025YTD returns: December 31, 2024–October 31, 2025**in US dollars

More impressively, the major market averages—the Dow, the S&P 500 Index, and the Nasdaq Composite—have all been up in each month—six straight monthly gains—since May.

As we briefly noted last month, government shutdowns typically have little impact on equities, and last month was no exception. Broadly speaking, the absence of all but essential government services does not have a lasting impact on the economy.

We did, however, experience a brief bout of volatility during the month when the president threatened punitive tariffs against China, which was primarily in response to China’s decision to tighten export controls on rare earth minerals and related technologies.

Rare earth minerals are crucial for manufacturing various high-tech products and military equipment, and China dominates the global supply chain.

However, cooler heads prevailed. As part of the truce, China agreed to delay its new export restrictions, and the president lowered some tariffs.

What were the major catalysts behind last month’s rally?

1. The government shutdown has delayed key economic data, but investors aren’t flying blind. In addition to private sources of data, investors are carefully combing through Q3 corporate profits, which have been quite strong overall, according to LSEG.

2. The ongoing boom in AI continues unabated and has been fueling investor enthusiasm.

3. The Federal Reserve delivered a widely expected quarter-point rate cut.

4. While Fed Chief Jay Powell tempered market enthusiasm by signaling that a December cut is far from certain, investors chose to focus on the generally favorable economic fundamentals, including solid corporate profits and the expanding economy.

   
   

Overall, October continued the upward momentum that began in May, driven by a combination of solid economic fundamentals, a stable interest rate environment, and the ongoing AI revolution, which remained a key catalyst for gains among large-cap tech firms.

I trust you have found this review informative and helpful. If you have any questions or would like to discuss any other topics, please don’t hesitate to reach out to me or any member of our team.