October was a rough ride for U.S. stocks, which regained a portion of the month's losses Wednesday but remained on pace for one of the worst months since the financial crisis.
U.S. markets lost more than $2.5 trillion in October coming into the month's final day of trading, according to S&P Dow Jones Indices analyst Howard Silverblatt, as losses spread widely across industry sectors. October is set to be the worst month for the S&P 500 since August 2011, Silverblatt noted.
"October volatility is legendary, and we're not just talking about the crash in 2008," Silverblatt told CNBC. "October is a much more volatile month than any of the others as far as quick declines go."
The month kicked off on a rocky note for stocks when Federal Reserve Chairman Jerome Powell said the central bank is "a long way" from neutral interest rates. Powell said the Fed does not need the policies put in place that pulled the economy out of the last financial crisis, declaring "we don't need" the "really extremely accommodative low interest rates" the central bank put in place a decade ago. The Fed is likely to raise the federal funds rate to 3.4 percent before pausing, according to the most recent projections.
Big technology stocks — most well-known as FANG: Facebook, Amazon, Netflix and Google parent Alphabet — were among the hardest hit this month. Amazon and Netflix are set to end the month down about 20 percent each, with investors fleeing after both earnings reports. Facebook and Alphabet are on pace to finish October down over 8 percent each.
October 2018 is set to be the worst October for stocks since 2008, when the S&P 500 plunged 16.9 percent, according to Silverblatt.
The S&P 500 slipped past two closely watched levels on Oct. 26, falling below its 200-day moving average and more than 10 percent from its intraday high hit on Sept. 21, a correction as defined on Wall Street. The 200-day moving average is one of the most popular technical indicators used by investors. October is set to be the fourth month this year that the S&P 500 bottomed at that key level.
The Dow Jones Industrial Average closed down 13 days in October as the index headed toward its worst month since January 2016. Both the Dow and S&P 500 are slightly positive year-to-date.
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The third-quarter earnings season was also on track to have been the worst for stocks since 2011, according to Bespoke Investment Group on Oct. 23. Roughly third-quarters of stocks had suffered a one-day decline on their earnings results this season, Bespoke found. The poor stock reactions were despite this third quarter being much better than last year's earnings season, with nearly 8 in 10 companies reporting better-than-expected earnings.
Dow components such as Caterpillar, 3M and DowDuPont were especially battered following earnings reports, as company leaders commented on increased costs from global risks such as rising interest rates, a strengthening dollar and the trade war with China.
"While this is a significant pullback, some of it does appear to be reallocation and money is sitting on the sidelines," Silverblatt said. "That should gives us a stronger base. Earnings were good but perception is everything: We expected a lot more."
The dollar index, which measures the strength of the U.S. dollar against a basket of currencies, has risen 2.1 percent this month.
Semiconductors were one of the hardest hit sectors in the stock market, with the VanEck Vectors Semiconductor ETF set to end the month down 12 percent. Shares of Nvidia, Advanced Micro Devices, Micron and Applied Materials are all on pace to post double-digit losses for October as investors fled following the companies' earnings reports this month. Those chip giants are also all in what some traders consider 'bear market' territory, down more than 20 percent from their recent highs.
AMD has had a particularly rough month — that stock was far and away the best performing stock in the S&P 500 at the end of September. But shares have plunged more than 20 percent since the start of October, its worst monthly performance since 1992.
– CNBC's J.R. Reed , Kate Rooney and Fred Imbert contributed to this report.
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