The Spooky Season Brings New Frights for Investors, But Some See Opportunity Ahead

Samantha Miller

The calendar has turned to October, synonymous with falling leaves, pumpkin-spice everything, and of course Halloween. But this spooky season brings fresh fears for investors after September’s market scares.

Major indexes like the Dow Jones Industrial Average and S&P 500 suffered their worst monthly losses since the pandemic began in 2020. The Dow shed 3.5%, the S&P 500 dropped 4.9%, and the tech-heavy Nasdaq plunged 5.8% in September.

These frightening falls came amid rising recession fears. Surging oil prices approaching $100 per barrel worsened inflation, which remains elevated near 40-year highs. This gave the Federal Reserve more reason to maintain its aggressive interest rate hikes, dashing hopes for a policy pivot.

“Everything is based on interest rates. When you value stocks and streams of earnings, the number one parameter that changes the value is interest rates,” said Eric Diton, president of wealth management firm The Wealth Alliance, in an interview.

Higher rates pressure stock valuations and corporate profits. They also increase borrowing costs, slowing economic activity. September’s market weakness coincided with additional rate hikes by the Fed, which lifted its benchmark above 3% for the first time since 2008.

The government shutdown added to September’s spooky sentiment. Halting services and paychecks automatically slows the economy as hundreds of thousands stop spending.

“One thing October has done a whole bunch of times is make a historic bottom in the month. A lot of major bottoms have occurred in that month,” Diton remarked.

October’s reputation raises investor anxiety. Massive crashes like 1929’s “Black Tuesday” that kicked off the Great Depression happened in this month. But October has historically outpaced September’s dismal performance.

Since 1950, the S&P 500 has averaged a 0.6% gain in October versus a 1.1% loss in September. The Dow has seen average October returns of 0.5% compared to September’s 0.6% decline.

Some analysts believe September’s sell-off sets the stage for a rebound. “While there are no guarantees, historically late September is a good time to ‘buy the dip’ in quality stocks,” said Cory Mitchell of

Diton sees excessive pessimism in the market, pointing to signs of a bottom. With the major indexes still hovering near breakeven for the year, he believes the fourth quarter and October could bring a positive turnaround.

Other experts caution there may be more tricks than treats this earnings season. “Uncertainty and volatility will remain high as long as inflation stays elevated, interest rates keep rising, and recession concerns won’t go away,” said Mark Haefele of UBS Global Wealth Management.

Much depends on upcoming inflation and jobs data providing clues about the Fed’s next policy moves. More aggressive action would prolong the frightening market environment.

This earnings season marks the first time total S&P 500 profits are expected to decline since 2020. High inflation and strong dollar headwinds have dampened results for many companies like Nike and FedEx.

Technology stocks drove much of 2022’s early gains, though the sector has stumbled recently. This leaves potential for rotation into unloved areas like consumer staples, utilities, healthcare, and energy.

“The market is just slightly positive in my view, so I’m not spooked or worried about the market giving up big gains,” said Diton. With muted expectations, there may be room for positive surprises this earnings season.

So while October’s spooky history raises investor anxiety, some see opportunities after September’s sell-off. Valuations have improved for many quality names following the Fed’s aggressive rate hikes.

Careful stock-picking combined with diversification and a long-term focus may help investors weather any tricks heading into year-end. The late-year rally could treat investors well, even in this frightening market.

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Samantha Miller is a business and finance journalist with over 10 years of experience covering the latest news and trends shaping the corporate landscape. She began her career at The Wall Street Journal, where she reported on major companies and industry developments. Now, Samantha serve as a senior business writer for, profiling influential executives and providing in-depth analysis on business and financial topics.
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