October's Volatility Signals Potential Bull Market Beginnings

2025-10-16 economy

New York, Thursday, 16 October 2025.
October has historically initiated five of the last twelve bull markets. The S&P 500’s recent record of 33 days without a 1% move suggests emerging volatility, indicating potential market shifts.

Historical Context and Current Market Conditions

October is often referred to as a ‘bear market killer,’ a month known for its potential to reverse bearish trends and kickstart bull markets. In fact, it has been the inception point for five of the last twelve bull markets. This year, the S&P 500’s recent stretch of 33 consecutive trading days without a 1% move marks the longest period of such low volatility since before the COVID-19 pandemic, highlighting a significant shift in market dynamics [1][6].

Sectors and Corporate Performance

Technology and communication services have been at the forefront of market gains over the past few years, with the ‘Mag 7’ tech companies contributing significantly to the S&P 500’s growth. These companies have accounted for over 39% of the index’s nearly 90% gain in the past three years. However, the market is beginning to diversify in 2025, with sectors like utilities and financials also showing strong performance [1][6].

Economic Indicators and Federal Reserve Actions

Recent economic data indicates that the U.S. economy remains resilient despite a government shutdown earlier this month. The Federal Reserve has hinted at a possible end to its ‘quantitative tightening’ program, which has bolstered investor confidence. Furthermore, the CME FedWatch Tool suggests a 98% probability of a rate cut this month, aligning with the Fed’s dual mandate to manage inflation and employment [3][4][5].

Future Outlook and Investor Sentiment

As the earnings season progresses, companies like Charles Schwab and ASML have reported strong results, further boosting market optimism. The ongoing AI rally is expected to continue driving gains, particularly in technology and semiconductor sectors. Despite geopolitical tensions and trade concerns, investors appear to be focusing on strong corporate fundamentals and the potential for economic growth driven by technological advancements [2][4][6].

Sources

market volatility bull market