Those gruesome statistics did little to assuage investors’ anxiety, which was high entering the month, given October’s reputation for being susceptible to stock market crashes. The 1929 and 1987 crashes occurred in October.
Stocks were hit hard Wednesday by worries about global growth after weak manufacturing data in the eurozone, jitters over the first Ebola virus case reaching the USA and ongoing angst over the pro-democracy protests in Hong Kong. What’s more, October’s scary reputation as a month when the stock market tends to crash (think 1929 and 1987) also gave investors pause.
But one day does not a market make, nor does it rule out the possibility of a bounce-back rally. (In pre-market trading, stocks were virtually flat, with futures on the Dow Jones industrial average up 6 points.)
Investors can only hope that the stock market follows up its weak showing on Day 1 of October 2014 like it has the past dozen times it sank more than 1% on the first trading day of the third quarter. The S&P 500 has posted gains the next day, the next week and for the rest of October after spooky first days that drench investors in red ink, according to Bespoke Investment Group.
Bespoke’s analysis shows average gains of 0.9% the next day, with positive returns 10 of 12 times. The index was 3.1% higher a week later, and 3.8% higher by the end of the month.
How did the market fare after a 2.9% dip on the first day of October 2011? “Pretty darn good, actually,” Bespoke noted. The S&P 500 was up 8.7% a month later and 14% by the end of the month.
Article source : http://americasmarkets.usatoday.com/2014/10/02/bad-start-to-oct-isnt-death-sentence-for-stocks/
