Worst Month Since 1987: Investors Say Good Riddance to October

Posted Oct 31, 2008 10:59am EDT by Aaron Task in Investing, Commodities, Recession
Related: ^dji, ^gspc, ^ixic, SPY, DIA, AXP, QQQQ
A big rally this week has salved something for the bulls, but October 2008 is going to go down as one of the worst months in financial market history.
Heading into Friday, the Dow was down 15.4% for the month, on track for the 11th-worst in its history and the worst month since 1987. (Earlier this week the Dow and S&P were on track for the worst month since 1931 so "worst in 21 years" doesn't seem as awful.)
October was the worst-ever month for Japan's Nikkei, despite this week being its best week ever.
The Reuters/Jefferies CRB Index of commodities plunged 24% this month, the steepest decline since 1956. Crude is on track for a record monthly drop, copper its biggest retreat in two decades and gold its worst performance in 25 years, Bloomberg reports.
Even as the markets seemed to find some footing this week, the economic hits keep on coming, which is why San Francisco Fed President Janet Yellen used such stark language yesterday.
Thursday's Q3 GDP report, while better than feared, was the weakest since 2001 and featured the first drop in consumer spending since 1991 and the biggest since 1980.
Friday's personal spending data showed a 0.3% decline in September, the biggest drop in four years.
In October, the Chicago Purchasing Managers Index fell to its lowest level since 2001.
Friday's U. of Michigan consumer confidence survey was the weakest on record, confirming the Conference Board's earlier report.
At the same time the economy is slowing, consumers are reigning in spending as they worry about job security. Getting out from under a mountain of debt is certainly good for individuals. But from a societal perspective in a consumer-fueled economy it raises what economists call "the Paradox of thrift."