The CBOE Volatility Index (VIX), often referred to as the market’s “fear gauge,” saw a sharp 34% increase in October, signaling intensified investor concern as the U.S. presidential election looms.

This spike marks the third-strongest October VIX increase for an election year, with only 2008 and 2020 witnessing larger jumps.

Excluding the extraordinary 52% spike in October 2008, driven by the financial crisis, and the 44% rise in October 2020 amid the COVID-19 pandemic, October 2024’s surge marks the highest volatility for an election-year October since the VIX’s index inception in 1990.

Political uncertainty is a significant driver of this volatility, with Vice President Kamala Harris and former President Donald Trump neck-and-neck in polling data, though Trump holds a substantial lead in betting markets.

Market-implied odds from CFTC-regulated platform Kalshi currently give Trump a 57% chance of re-election.

Concerns over the candidates’ fiscal policies and the country’s ballooning national debt levels are adding to market tension, as neither candidate has outlined a plan to tackle the fiscal risk.

S&P 500 Ends Five-Month Rally

Alongside political anxiety, disappointing earnings from major tech companies fueled a late-month selloff.

The S&P 500, as measured by the SPDR S&P 500 ETF Trust SPY, fell in October, snapping a five-month winning streak. Microsoft Corp. MSFT led the decline, dropping 6% on Thursday — its worst single-day performance in over two years — as guidance over 2025 revenue disappointed earnings.

Quincy Krosby, chief global strategist at LPL Financial, highlighted that mega-cap tech’s forward guidance disappointed markets, particularly around AI spending and the slower-than-expected integration of AI into Microsoft’s cloud services. “The market overall has been disappointed with mega tech guidance,” she said, highlighting the potential impact on market sentiment as the election draws near.

Analysts Warn of Further Volatility

Many analysts see no immediate end to the current bout of market anxiety.

Michael Gayed, CFA, commented, “I think the markets could be a little more prepared for a Trump win this time around, but I wouldn’t be surprised to see the VIX start to pick up again.”

David Morrison, senior market analyst at Trade Nation, echoed this sentiment, warning that “volatility remains elevated and is unlikely to pull back until there’s certainty over the result of next week’s Presidential Election.”

Morrison added that a decisive election outcome could alleviate some market fears, but with polling data as tight as it is, uncertainty is likely to persist.

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