- After the sell-off in September, October offers investors an opportunity.
- Monumental vaccine developments could boost stock prices this month.
- October is the last month before the election chaos becomes a reality.
Investors have had a wild ride so far this year – but for those who weathered the March dip, this has been mostly positive. September sparked a sell-off as the stock market reacted to rising tensions ahead of the US election. This week has the positive coronavirus test by the president Some wondered if the fourth quarter could bring more sales.
The answer to that question is likely yes. The fourth quarter appears to be a bloodbath for investors. Few profitable deals will take place between the pandemic uncertainty and the likelihood of a controversial presidential election.
The September pullback on the stock market offers buying opportunities
Before you panic and switch to cash, here are some things to consider: October is historically good for investors. According to Bespoke Investment Group, the Dow Jones Industrial Average ended October on a high 70% of the time over the past two decades.
While there have been a few exceptions to the rule, the underlying message is clear: seasonality favors the bulls.
The September sell-off opened up some enticing entry points into quality companies that started after the March slump. Microsoft is a big name in this category that comes to mind. While MSFT stock has had an overall hit year so far, it’s down 10% from its August high.
October marked a turning point for a coronavirus vaccine
However, that’s not the only reason investors should consider staying in the market for the next four weeks. There are also some potentially market-moving milestones in the vaccines space this month.
Donald Trump goes to the hospital for treatment for the coronavirus in the video below.
First of all, there’s Donald Trump’s most recent diagnosis. If he’s successful treated with remdesivirThis could increase optimism about doctors’ ability to fight the virus with effective treatments. Check out the video below:
Additionally, this could be the month we see a coronavirus vaccine successfully complete clinical studies. Pfizer has consistently announced that it will expect results from its coronavirus vaccine in October. If successful, the drug would move from testing to production and distribution. While it would take time to sort out the logistics, it would mark a major turning point in the fight against the coronavirus. It would also bring a massive shot of optimism to the stock market.
While Pfizer is the only drug company expected to complete clinical trials in October, its failure to do so wouldn’t necessarily crash the stock market. Others, including Moderna, AstraZeneca, and Novavax, are set to hit key milestones this month.
Election drama probably in months
Last but not least, October is the last month in which investors see election uncertainty as a possibility rather than a reality. The chances are good on November 3rd The world won’t know who the next president will be. If voting results and disputes drag on until December, there will be unrest among Americans could get overwhelming and scare investors.
Even if a clear winner is identified, investors should expect short-term volatility through the end of the year. If Joe Biden wins, investor thoughts will immediately be focused on whether the Democratic candidate will do his well promises to raise the corporate tax rate. A Trump victory could spark unrest and protests across the country, which could add to market uncertainty.
Disclaimer: The opinions expressed in this article do not necessarily reflect the views of CCN.com and should not be regarded as investment or trading advice to CCN.com. Unless otherwise stated, the author has no position in any of the securities mentioned.