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September is historically the worst month for stocks, when the Nasdaq, Dow Jones Industrial Average, and S&P 500 typically perform the worst. September 2021 was no exception, but this time it was worse than normal. If history is any indicator, it looks like investors could be in for the same in October.

How Will Stocks Perform in October and the Fourth Quarter?

Investors are used to stocks taking a breather in September. On average, during the last month of the third quarter, the Dow Jones Industrial Average gives up 0.8% and the S&P 500 and NASDAQ both fall 0.5%.

During the 2021 September slide, the S&P 500 tumbled 3.9%, it’s first monthly drop since January. The S&P 500 also ended the third quarter up just 0.2%, the smallest quarterly gain since the coronavirus first rocked the financial markets in early 2020.

During September, the Dow Jones lost 3.5% of it’s value, and the Nasdaq slid 4.6%. Overall, it was the worst September performance since 2011 and the worst month for stocks since March 2020, when the European debt crisis was wreaking havoc.

The 2021 September Slide was triggered by a number of big issues, including China Evergrande Group’s financial troubles. The People’s Bank of China has since chimed in and said it won’t allow the company to default on its mountain of debt, which should save the broader banking system.

There are other issues of course, like rising bond yields, which put a dent in valuations of technology companies and resulted in a sell-off. Inflation and the broken supply chain system has resulted in companies lowering their earnings estimates. And the highly contagious Delta variant continues to undermine the economic recovery.

It’s not all doom and gloom. The stock market has been climbing for most of 2021, with the S&P 500 still up 14.7%. The Dow has advanced 11.3% year-to-date and the Nasdaq has rallied 12.2%.

Because of a myriad of ongoing issues though, those numbers could erode further in October. Again, history is not on the side of investors. Going back to its inception, the S&P 500 falls 0.4% in October after the index gives up two percent or more in September with the Dow typically falling one percent. One outlier is the Nasdaq, which goes on to gain an average 1.7% in October.

History does not mean October will be a bad month, though. The broader stock market is still trading near record levels and October is generally seen as being the start of a better seasonal period for stocks.

The U.S. Commerce Department upgraded its gross domestic product (GDP) estimate for the second quarter to 6.7% from 6.6%. Right now, the Commerce Department expects third quarter GDP to slow to 5.5%; but it always provides three estimates, so that number could go up.

Meanwhile, Statistics Canada reported that July GDP dropped 0.1%, much better than the forecasted 0.4% decline. Statistics Canada early projections show August GDP rallied 0.7%; far quicker than the average monthly increase of 0.2%.

Learn-To-Trade.com, Canada’s Leader in Stock Market Trading Courses

The September Slide saw the three major indices give up a lot more ground than they historically do. Early economic indicators suggest the fourth quarter will be better, but because of a number of ongoing issues, stocks could give up additional ground. What this means is that investors can’t get complacent; especially with a wobbly bull market and economic recovery that has been zig-zagging. The trading professionals at Learn-To-Trade.com can help you navigate the uncertainty.

As Canada’s oldest and leading provider of stock market trading courses, the experts at Learn-To-Trade.com understand that investors have different needs. That’s why we provide a unique, Lifetime Membership that allows you to re-attend any part of the comprehensive program as often as you’d like.

To learn more about Learn-To-Trade.com’s stock market trading course, contact us at 416-510-5560 or by e-mail at info@learn-to-trade.com.