We’re doing something a little different this week. The chart we’re looking at isn’t one of our go-to indicators—it’s more of a historical curiosity. But with the market falling over 9% last week, it’s worth digging into how things have played out after similar drops.
Since 1944, there have only been five other times the S&P 500 has fallen this much in a single week. The chart shows what happened next. Each line tracks the S&P’s performance over the following year, starting from the week of the big drop. There’s also a table in the middle showing how the market did the week before, the week after, and six months down the road.
What’s interesting is that the next week really seems to matter. In cases where the market bounced or at least held steady—like in 2000 or 2020—stocks usually did pretty well over the next six months. But when the selling continued, like in 1987 or 2008, the pain tended to stick around a while longer.
So where does that leave us now? If this week turns into another rough one, history suggests we could be in for more downside. But if stocks can stabilize, there’s a shot at recovery.
Now, to be clear, this isn’t something we’d base decisions on. It’s a small sample size and more of a “food for thought” kind of thing. That’s why we lean on our Risk-Aware Investment process instead. It looks at a broader set of data and gives us a better read on what’s really going on under the surface—so we’re not just guessing what comes next.
But still, in moments like this, it’s helpful to see how things have played out before. And right now, the next move could be a big clue.
This is intended for informational purposes only and should not be used as the primary basis for an investment decision. Consult an advisor for your personal situation.
Indices mentioned are unmanaged, do not incur fees, and cannot be invested into directly.
Past performance does not guarantee future results.
The S&P 500 Index, or Standard & Poor’s 500 Index, is a market-capitalization-weighted index of 500 leading publicly traded companies in the U.S.