The S&P 500 dropped 1.2% in the first two trading sessions of October, extending a September slump as a federal government shutdown halted the release of the monthly jobs report that investors use to gauge the economy. The Dow Jones Industrial Average fell 0.9% over the same stretch, and the Nasdaq Composite shed 1.6%, dragged down by the same artificial-intelligence stocks that powered most of 2025's gains.
October has historically been the most volatile month on the calendar for U.S. equities. Since 1950, the S&P 500 has averaged a 0.9% decline in October, the only month with a negative average return, according to S&P Global. The month's reputation rests on some of the worst single days in market history: the 1929 crash, the 19.4% Black Monday plunge on Oct. 19, 1987, and the 2008 financial crisis selloff.
This year's twist is the data blackout. The Bureau of Labor Statistics did not publish the September employment report on Oct. 3 because of the shutdown, and the October report scheduled for Nov. 7 is also in doubt. Without those numbers, the Federal Reserve has less evidence to weigh when it meets Oct. 28-29, and traders have cut the odds of a December rate cut to roughly 55% from 70% a week ago, according to CME Group futures pricing.
The shutdown began Oct. 1 after Congress failed to pass a spending bill. A prolonged closure would delay not just payrolls but also the consumer price index and retail sales figures, leaving the Fed and investors flying blind into the final quarter.
Earnings season adds another test. Roughly 120 S&P 500 companies report results in the last two weeks of October, including most of the largest banks and four of the so-called Magnificent Seven technology firms. Analysts expect S&P 500 earnings to grow 7.4% from a year earlier, according to FactSet, a pace that leaves little room for disappointment given the index trades at 22 times forward earnings.
"If stocks see another big swoon this year, investors already know why," said Sam Stovall, chief investment strategist at CFRA Research. "October's problem is that it arrives with the market priced for good news and no fresh data to confirm it."
Two other forces bear watching. October is a heavy month for Treasury auctions, and rising long-term yields have pressured equities all year. And the presidential election is Nov. 3, which historically pushes volatility higher in the final weeks before voters go to the polls.
The CBOE Volatility Index, Wall Street's fear gauge, closed at 19.8 on Thursday, up from 15.2 at the start of September and above its long-run average of 19.4. Options traders are pricing wider daily swings in October than in any month since April.
