- The S&P 500® was down 2.77% in October, bringing its YTD return to 1.21%.
- The Dow Jones Industrial Average® lost 4.61% for the month and was down 7.14% YTD.
- The S&P MidCap 400® increased 2.09% for the month and was down 7.89% YTD.
- The S&P SmallCap 600® returned 2.49% in October and -14.16% YTD.
The fairy tale continued in October, as the S&P 500 reached 3.04%, reversing last month’s decline
(-3.92%), with all 11 sectors up, and getting back on the upward track of recovery from the low on March 23, 2020—that is until the week of Halloween, when the market’s treat turned to trick. The initial cause of the lack of candy, also known as Phase Four, was that it was suddenly taken away, as Congress left town for the election, without passing a relief bill. While some blamed the pre-election political fighting for the lack of passage, more saw the market’s belief that it would get its candy now as the issue. As for the spark (I think Shakespeare said it best, “your houses”), the quick market turnaround produced broad declines for the S&P 500 (-5.64% for the week), leaving the spooky month of October in the red (-2.77%), as uncertainty around politics took over the Street. Even earnings, which still dominated individual trades, were unable to reassure the market, as 85.2% of them beat their estimates (which were lowered by 29.9%); perhaps if one or two of them would have offered some forward guidance… then again, if they knew, they would tell. Meanwhile, COVID-19 case count has been rising in the U.S. (along with the yardstick seven-day average) and has set daily new records. Worse were the coming attractions from Europe, where reclosings, curfews, and country isolations were increasing, with expectations that these events would spread beyond the pond in time for Thanksgiving. At this point, only Asia appeared to have maintained some control of the virus (actually New Zealand appeared to be the poster child of success), and even that was of concern. The bottom line for October was a second month of declines, which left the S&P 500 up 1.12% YTD (down 3.43% from the pre-COVID Feb. 19, 2020, high and -8.68% from the closing high on Sept. 2, 2020), which given the economics was still good and showed a lot of optimism for the recovery. As for November, my vote (and it appears that of almost everyone I talk to) is for significantly more volatility, as the election and its results play out, with the Street hoping that eventually it will reduce uncertainty and add clarity (for better or worse, or both), which will permit market participants to adjust and get on with their lives. The S&P 500 closed at 3,269.96, down 2.77% (-2.66% with dividends) for the month, from last month’s close of 3,363.001, when it decreased 3.93% (-3.80% with dividends); the three-month return was -0.04% (0.37%), the YTD return was 1.21% (2.77%), and the one-year return was 7.65% (9.71%). The Dow closed at 26,501.60, down 4.61% (-4.52% with dividends) from last month’s 27,781.70, when it was down 2.28% (-2.18% with dividends). Over the three-month period, The Dow was down 0.04% (0.80%), the YTD period was down 7.14% (-5.38%), and the one-year return was -2.01% (0.34%).