The S&P 500 has demonstrated significant volatility over the past two weeks, with a 4% gain last week — its largest weekly increase since October 2023 — following a sharp 4.2% decline the previous week, marking the largest drop in a year and a half. Historically, market fluctuations tend to escalate between August and October, with October consistently recording the highest volatility based on daily S&P 500 returns over the past 40 years.
An analysis of the VIX (Volatility Index) from 1990 to 2023 reveals that market uncertainty typically peaks in mid-October, with an average high of 22.3. However, in U.S. election years, this peak is delayed until late October, just about a week before Election Day, when the VIX reaches an average high of 27.8 — approximately 25% higher than the overall period average (see chart). In other words, as we approach October and the U.S. Election Day, market volatility is expected to escalate further, particularly given recent market behavior and the uncertain economic outlook.
Eric Lui
