October’s spooking investors

Investors know October is the stock market’s scariest month. But this October finds them jumpier than usual. The magnitude of the year’s calamities – the tsunami, the Pakistan earthquake and Hurricane Katrina – has prompted some to prepare for disasters of almost every stripe.

The declines in the first half of the month haven’t made anyone calmer. The Dow Jones industrial average has fallen 281.36 points, or 2.66 percent so far. The Nasdaq has lost 4.03 percent and the S&P, 3.44 percent.

Now that we’re midway through the month, it’s worth looking back at what past Octobers have brought and ahead to assess investors’ biggest fears for the immediate future.

If investors think October has the potential for absolute misery, it’s because most of the market’s darkest days came in October: the crash of 1929, the Black Monday crash of 1987 and 1989’s Friday the 13th mini-crash.

But over the last 33 years, the major indexes have gained points in October more often than they’ve lost.

October tends to be the month the market hits bottom and moves higher, according to Jeffrey Kleintop, chief investment strategist for PNC Advisors. Some call October “the bear killer,” since October has turned the tide in nine of 18 bear markets following World War II.

While October in general may not have earned its nasty reputation, this October, investors are looking at both biblical-scale disasters and worrying economic issues.