History says the stock market’s dismal October points to a rally over the next 6 months

• After selling off in October, stocks could be in for a sustained rally, Ned Davis Research said.
• In previous instances where the S&P 500 declined in October, stocks gained a median 5.3% over the next six months.
• Other forecasters have made the case for a incoming rebound in stocks as bond yields ease.

Stocks weathered a tough sell-off in October to mark the third straight losing month for investors – but that could set the stage for a strong rally in the coming months, according to Ned Davis Research. 

The research firm pointed to the recent slide in the S&P 500, with the benchmark index shedding 2% through the month of October as bond yields surged and investors remained concerned about the outlook of higher-for-longer interest rates.