Photograph by Harry Benson/Getty Images
After a brutal October for the stock market, November couldn't come soon enough. Let's hope it brings more than just Turkey leftovers.
Consider: Even following Wednesday's Halloween gains to close the month, stocks still reeled in a scary October. The Dow Jones Industrial Average dropped 1,342.55 points, or 5.1%, its worst one-month loss since 2015, while the S&P 500 slumped 6.9%, its worst since 2011. The Nasdaq Composite tumbled 9.2%, its worst drop since 2008. The two sectors that had been helping to drive the market higher-Information Technology, home to Apple (AAPL) and Microsoft (MSFT), and Consumer Discretionary, home to Amazon.com (AMZN)-suffered their worst drops since 2010 and 2008, respectively.
The good news is that November has a history of being A-OK for the stock market. Since 1928, the S&P 500 has averaged a 0.7% rise in November, according to Yardeni Research, making it the fifth-best month for the market. The S&P 500 has risen in 60% of the Novembers since 1928.
Just because the odds favor gains doesn't mean they're guaranteed. October is also supposed to be a pretty decent month for stocks, and we've seen how that turned out. Still, a lot could go right for the market. Earnings season will be coming to an end, and so will the commentary companies have been offering about the impact of tariffs. The midterm election season wraps up next week, allowing the market to start obsessing about something new entirely. President Donald Trump and China President Xi Jinping are also set to meet in November, and while there's worry about more tariffs being implemented if no progress is made, any signs of thaw on trade could send the market shooting higher. If the negatives go away, or are at least dialed down a bit, stocks could rally again in November.
But then again, maybe not. Bay Crest Partners' Jonathan Krinsky noted that Wednesday was a weak up day, if such a thing is possible: Despite gaining 1.1%, only 301 S&P 500 stocks rose on the day, while 192 fell, the worst so-called breadth day for the index on a day it gained 1% or more since 2009. There have been 68 times when the difference between S&P 500 winners and losers was 125 or less, Krinsky noted, and the index has averaged a 1.3% decline over the next 20 days. "Given [Wednesday's] weak breadth rally, and weak close, the probabilities that we head back lower from here has to now be elevated," Krinsky said.
Who knows? Maybe by the end of November there really will be a reason for thanksgiving, at least for the stock market. But then again, maybe not.
Write to Ben Levisohn at Ben.Levisohn@barrons.com