Two stock market stats giving investors some hope this fall: Morning Brief

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Tuesday, Oct. 18, 2022

“Past performance is no guarantee of future results” may be the most repeated disclaimer in the financial services industry.

It’s a warning to investors not to get too excited about what they think is a replay of a historical pattern. Because oftentimes, history doesn’t repeat itself.

That said, if history is any indication of what could come, the fall of 2022 could mark the end of what’s been months of selling that sent the S&P 500 down about 25% from its Jan. 3 high to its Oct. 12 low.

“Major market bottoms have occurred in October more than any other month,” Ari Wald, head of technical analysis at Oppenheimer, noted last month.

Charts, like the one below from Jeff Hirsch of Almanac Trader, have been circulating widely on social media.

Image: Stock Trader's Almanac — Image: Stock Trader’s Almanac

“Not all indices have bottomed on the same day for all bear markets, but the lion’s share, or bear’s share I should say, bottomed in October,” Hirsch wrote.

Another impressive stat that’s been passed around is how stocks performed around midterm elections.

“[T]he S&P 500 has risen in the year after every single one of the 19 midterm elections since World War II, with not a single instance seeing a negative return,” Jim Reid, global head of credit strategy at Deutsche Bank, observed last week.

Image: Bloomberg Finance and Deutsche Bank

This year’s high-stakes election on Nov. 8 could end with Democrats losing control of the Senate and/or the House, which increases the likelihood that little new legislation gets passed amid gridlock. Ironically, gridlock is often thought to be bullish for stocks as it removes some policy uncertainty.

To reiterate, none of this means it’s a sure thing that markets will begin a sustained rally this fall. This year, in particular, has been an unusual one as the Federal Reserve has been explicitly beating down markets in its efforts to bring down inflation. And inflation continues to be persistently high.

As market veteran Sam Stovall often says, “History is a great guide, but it’s not gospel.”

Today’s newsletter is by Sam Ro, the author of TKer.co. Follow him on Twitter at @SamRo. Read this and more market news on the go with Yahoo Finance App.

What to Watch Today

Economy

9:15 a.m. ET: Industrial Production, month-over-month, September (0.1% expected, -0.2% during prior month)
9:15 a.m. ET: Capacity Utilization, September (80.0% expected, 80.0% during prior month)
9:15 a.m. ET: Manufacturing (SIC) Production, September (0.2% expected, 0.1% during prior month)
10:00 a.m. ET: NAHB Housing Market Index, October (43 expected, 46 during prior month)
4:00 p.m. ET: Net Long-Term TIC Outflows, August ($21.4 billion during prior month)
4:00 p.m. ET: Total Net TIC Outflows, August ($153.5 billion during prior month)
10/18-10/21: Monthly Budget Statement, September (-$128.0 billion expected, -$64.9 billion during prior month)

Earnings

Albertsons (ACI), Commerce Bancshares (CBSH), First Horizon (FHN), Goldman Sachs (GS), Hasbro (HAS), Interactive Brokers (IBKR), Intuitive Surgical (ISRG), J.B. Hunt Transport (JBHT), Johnson & Johnson (JNJ), Lockheed Martin (LMT), Signature Bank (SBNY), State Street (STT), United Airlines (UAL), Truist Financial (TFC)