- The S&P 500 is set to finish the month having had its worst October since the 2008 financial crisis.
- Benchmark US index has lost around 8.5% in October, the biggest monthly drop since February 2009.
- Both the Dow Jones and Nasdaq have also endured major losses.
- Concerns ranging from a US-China trade war, Federal Reserve interest rate policy and a slowdown in global growth led to a wave of heavy selling.
- Global stocks have also slumped, with the MSCI All-World Index losing 4.5%.
Stocks are set to end October having endured the worst month for the S&P 500 since February 2009 and the worst October since the 2008 financial crisis. The benchmark US index is set to drop about 8.5%, only outdone by the 16.8% loss the index witnessed in 2008, just weeks after the collapse of Lehman Brothers.
The month was plagued by bad news but lacked a clear catalyst. Concerns ranging from a US-China trade war, Federal Reserve interest rate policy and a slowdown in global growth led to a wave of heavy selling in the S&P, as well as the Dow Jones and the Nasdaq.
Selling was not limited to the US, with Chinese stocks plummeting, and the MSCI All-World index dropping about 10% across October.
In the US in particular, the biggest concern for investors is that after years of monetary stimulus and a short-term boost from the Trump administration's tax cuts, more rate rises and lower bond prices will ultimately bring the US economy to a halt.
Growth is still going strong, but many believe that will flip soon, particularly when factoring in the potential negative impact of President Trump's trade war, which by some measures is already starting to hurt the domestic economy.
Another factor for the markets is the slowing Chinese economy, which after a decade or more of blockbuster growth is reaching maturity, bringing with it smaller increases in GDP. Debt levels in China are also huge, another major concern for many in the markets.
China's current account balance is down significantly from last year's 1.3% and will likely turn into a small deficit in 2019. If so that would be the first time in 24 years.
"The larger the stimulus used by China to offset the trade war impact, the bigger will its deficit likely be," UBS's Tao Wang, chief China economist, said in a report earlier in the month.
That may hurt confidence and hasten outflows, putting pressure on the nation's currency.
"Although CNY depreciation can partially offset trade war impact, a large depreciation will likely hurt domestic confidence, trigger panic outflows and risk financial stability," UBS said.
The tail end of October has seen an additional negative driver, particularly for the Nasdaq, as disappointing earnings reports from the US tech giants Amazon, Google, and Snap helped to further drag down sentiment.
Oil prices are also a major concern, with the combination of looming sanctions against Iran, and the possibility that Saudi Arabia will choke output in response to international outcry over the killing of journalist Jamal Khashoggi in the country's consulate in Istanbul, leading some to believe prices could ratchet higher in coming months.
High oil prices tend to stunt economic growth, particularly in developing markets where increasing oil consumption is a key driver of rapid growth. Brent traded as high as $84 per barrel in early October, and while it has now fallen around 9% to $76 per barrel, that remains an elevated level compared to the past four years.
Stocks may have witnessed a horror month, but look likely to bounce a little on October's final day, with the S&P 500 set to gain about 0.7% once markets open at 9.30 a.m. in New York.