Today marks the 96th anniversary of “Black Tuesday”, October 29, 1929, the second day of a two-day sell-off that saw the S&P 90 Index (predecessor to the S&P 500) fall 21.8%, making it the second-worst two-day decline in the indexes’ nearly 100-year history, trailing only the 1987 crash referred to as “Black Monday”, where markets declined 24.6% from October 16–19.
“Black Tuesday” ranks as the fourth-largest daily decline in the S&P 500’s history, as the index fell 10.2%. The previous day in 1929, coincidentally also called “Black Monday”, experienced the second-largest drawdown in history, with the index declining 12.3%. The S&P 500 has only realized a daily loss of greater than 10% four times in its history, with two of those double-digit losses occurring in this two-day stretch in 1929 and the only occurrence of consecutive double-digit daily declines.
Interestingly, October has realized some of the largest single-day declines in market history, with six of the top 10 and nine of the top 20 declines occurring in the first month of the fourth quarter. Other notable declines included October 18, 1937 (S&P 90), down 9.3% following the initial recovery from the Great Depression, and October 15, 2008, dropping 9.0% at the height of the Global Financial Crisis.
Source: LPL Research, FactSet 10/27/25
The “October Effect”
So why has October experienced some of the largest daily drawdowns?
Major stock market crashes in past Octobers, namely the crashes of 1929 and 1987, have created a psychological “October Effect” where investors believe the market will trade lower based on history. Other contributing factors to the “October Effect” include end-of-year portfolio rebalancing, which may cause increased trading volume and price swings, as well as third quarter corporate earnings, where earnings results and year-ahead outlooks can introduce market volatility, causing sharp market reactions.
While some of the largest drawdowns have occurred in October, the “scary
S&P 500 History Shows Why October Drawdowns Still Haunt Investor Psychology
