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Major crashes in the market occurred in October. Here's why you shouldn't panic yet.



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Top Line: The stock market's rough beginning of the month has some investors remembering other horrific Octobers in the past – but history suggests there may be no panic.

  • October is known for major market crashes – Black Tuesday in 1929, Black Monday in 1987 and the start of the financial crisis in 2008.
  • The major indices have plunged during the first two days of October: Since Tuesday, both Dow Jones The Industrial Average and the S&P 500 had more than 3%, with the rough start to the month already wiping out both index gains for September, not to mention for the entire third quarter. [19659010] The last decades however, October has not has been scary at all: "The good news, you gh, is that while October has had a bad rap for some big drops, the last 20 years have actually been the third best month of the year for stocks," said Ryan Detrick, senior market strategist for LPL Financial. & nbsp; [19659010] However, the sudden volatility of October could prove worrying since September was so calm (the S&P 500 did not fall 1% on a single day last month). "The lack of any volatility in September may mean that the usually unstable month of October may be due to some large swings," Detrick describes.

Key Background: With S & amp; P 500 for just over 17% gain for the year, investors are starting to be more cautious as they worry about the beef market running on smoke. Lack of progress with a trade transaction continues to dominate headlines, while economic growth slows, allowing investors to forget the fear of a recession.

Crucial Quote: This "October effect" is just "Market Anomaly" that has more to do with investor behavior than the basics of the stock market, says Carter Henderson, portfolio specialist and director of institutional development at Fort Pitt Capital Group. "As we saw last year, even the smallest volatility can lead to overreactions in the market." & Nbsp;

What to look for: If negative headlines – especially about trade or the economy – continue, the market could be in for more of a sell-off, says Edward Moya, senior market analyst at OANDA. "We can definitely expect more volatility in October than we have seen in recent months."

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Top Line: The stock market's rough beginning of the month has some investors who remember other horrific Octobers in the past – but history suggests there may be no panic yet.

  • October is known for major market crashes – Black Tuesday in 1929, Black Monday in 1987, and the start of the 2008 financial crisis. [19659010] The big indices have plunged during the first two days of October: Since Tuesday, both the Dow Jones Industrial Average and the S&P 500 had more than 3%. The rough start to the month has already wiped out both indexes for September, not to talk about the entire third quarter.
  • However, the last few decades, October has not been scary at all: “The good news, however, is that October has had a bad turnout for some big drops, the last 20 The years have actually been the third best month of the year for equities, says Ryan Detrick, senior market strategist for LPL Financial.
  • However, the sudden volatility of October can be worrying since September was so calm (the S&P 500 did not fall 1% on a single day last month). "The lack of any volatility in September may mean that the usually volatile month of October may be due to some large swings," Detrick describes.

Key Background: With the S&P 500 at just over 17% gain for the year, investors are starting to become more cautious as they worry about the beef market running on smoke. Lack of progress with a trade transaction continues to dominate headlines, while economic growth slows, allowing investors to forget the fear of a recession.

Crucial Quote: This "October effect" is just "Market Anomaly" that has more to do with investor behavior than the basics of the stock market, says Carter Henderson, portfolio specialist and director of institutional development at Fort Pitt Capital Group. "As we saw last year, even the smallest volatility can lead to overreactions in the market."

What to look for: If negative headlines – especially about trade or the economy – continue, the market could be in for more of a sale, says Edward Moya, senior market analyst at OANDA. "We can definitely expect more volatility in October than we have seen in recent months."


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