Worst month for stocks in seven years

LOS ANGELES » What a difference a month makes.

A period of relative calm on Wall Street that led to a milestonesetting September for the stock market came to a sudden, screeching halt in October.

The slide snapped a sixmonth winning streak for the benchmark S&P 500 index, with October clocking in as the worst month for the market since September 2011.

On Oct. 29, the S&P 500 narrowly missed closing in what Wall Street calls a correction — a drop of 10 percent or more from a recent high. The index ended the month down 7.5 percent from its alltime high set Sept. 20 and down 6.9 percent for the month. The Nasdaq briefly entered into a correction before recouping some of its losses this week. The technologyheavy index finished October down 9.9 percent from the record set Aug. 29 and down 9.2 percent for the month.

The market’s reversal in October came as investors grew concerned that corporate profits, which drive stock market gains, could be poised to weaken.

“Investors were worried about politics and earnings,” said Sam Stovall, chief investment strategist for CFRA. “Politics because of the upcoming midterm elections, as well as the China trade dispute . ... And from an earnings perspective, investors started to worry about an earnings peak.”

While profits have been extremely strong this year — earnings for the S&P 500 are estimated to have risen by 24.8 percent in the third quarter after a 25.2 percent gain in the second quarter — several big companies, including Amazon and AT&T, reported quarterly earnings or revenue during the month that fell short of expectations. And some company executives warned of rising costs related to the U.S.China tariffs and inflation — factors that could weigh on earnings next year.

“While nine of 11 sectors have seen increases in thirdquarter estimates, an equal number — nine of 11 — have seen fullyear 2019 earnings reductions,” Stovall noted.

The disappointing company outlooks added to investors’ jit ters about the health of corporate America and the economy.

The Federal Reserve has been hiking interest rates, and has indicated it’s likely to continue doing so for the next two years. The escalating U.S.China trade dispute is adding to some companies’ costs, which could dampen profits. And on top of all that, an economic slowdown in China has traders worried about slower global economic growth.