As of yesterday’s close, the S&P 500 Index’s total return for October is -1.26%. If that number holds through tomorrow, it will break the seven-month streak of positive returns for the index.
Why was October a down month?
I can think of a few reasons:
1. Profit-taking. It seems to happen after we have a massive runup in stocks, like we saw from March through September when the index was up nearly 46%.
2. Investors might be wondering how much further up the market can go considering the current economic conditions. Unemployment is still up and is still trending up. It’s hard to have a recovery with legs if unemployment is high.
3. Consumer spending is down, which puts pressure on GDP since 71% of our GDP comes from consumer spending. People are still paying off debt. Those dollars going towards debt aren’t going towards spending.
I don’t know about you but I have been scratching my head, wondering why the market was marching back up as quickly as it did.