As a kid, October was the month for opportunity. It’s when walnuts fell from the tree, and my Poppy and I would pick them up and haul them in feed sacks to sell. It was work in the beginning, but it gave us some extra spending money at the end. That might be exactly how October will unfold in the stock market: a little work at the beginning, but some reward in the end.
The S&P 500’s average return in October over the last decade has been approximately 2%. Since 1950, October has had a positive return nearly 60% of the time. All in all, October is somewhat of a middle-of-the-road market month. Unless, of course, there is uncertainty. Cue a government shutdown!
The US government shut down on October 1, 2025, as lawmakers failed to find a way to work together. Since 1976, there have been 21 government shutdowns, with the most recent one in 2018, which lasted a record 35 days. The stock markets hate uncertainty, and while the average shutdown lasts only eight days, a shutdown is a concern for investors.
Historically, markets aren’t impacted much by a shutdown, for example, in 2013, when the government was shut down for 16 days during the first part of October. The S&P 500 was up 3% during those 16 days, although on average, markets tend to be fairly flat during these bouts of political infighting.
Though we have the negativity of the shutdown, we do have the good tidings of October, which have nothing to do with pumpkin spice anything. Examining the market data further reminds us that October is a precursor to the even stronger market months of November and December. The month of October is the front door, you might say, to the last quarter of the year. October to December is the strongest three-month period of the year, with an average return of almost 2% since 1950 and over 6% the past five years.
Oh, but not everything is rosy. There is a chance we could have a pullback before the Santa Claus rally takes off. This shutdown, the Gaza ultimatum, the markets’ recent overbought conditions, and the September slump that never happened — any one of these could scare the market and cause stocks to slip. This could potentially set up an opportunity to buy the dip, especially as we enter a seasonally strong fourth quarter.
I am staying neutral on stocks, but I am especially watching the Gaza situation and how drastic lawmakers allow the shutdown to get. All that said, after a brief pullback, things are lining up favorably for stocks to have a nice fourth quarter.
Poppy and I didn’t have these fancy cage rollers people use to pick up walnuts these days. We got down on the ground and swept the walnuts into buckets, then carried the buckets to the truck to dump them into the feed sacks. There was nothing fun or easy about it, but if one worked steadily and stayed at it, there was a profit to be gained. The stock market is no different. There is no “set it and forget it,” successful investors are those who have a proven process and aren’t afraid to work.
Have a blessed week!
Richard Baker
Opinions voiced above are for general information only & not intended as specific advice or recommendations for any person. All performance cited is historical & is no guarantee of future results. All indices are unmanaged and may not be invested directly. Noted statistics are according to LPL Research.
The economic forecast outlined in this material may not develop as predicted & there can be no guarantee that strategies promoted will be successful.
Fervent Wealth Management is a financial management and services entity in Springfield, Missouri.