Volatility returned with a vengeance in October as the market experienced the biggest monthly selloff since 2011 with the Dow Jones Industrial Average, S&P 500 Index, and NASDAQ Composite falling 5.7 percent, 6.7 percent, and 9.2 percent, respectively from their all-time closing highs. In just two days, October 10th – 11th, the Dow lost 1377 points, or 5.2 percent.
There was no shortage of reasons for the decline given various concerns including the upcoming mid-term elections, the ongoing trade war with China, concern about Federal Reserve interest rate policy, rising geopolitical tensions, and slowing global growth to name a few. Nonetheless, what is not in dispute is that the market direction changed dramatically following an interview by Fed Chairman Jerome Powell on October 3, 2018. Whether intentional or not, Mr. Powell’s comments seemed to convey a greater sense of urgency on the part of the Fed to raise interest rates more aggressively.