As of yesterday’s close, the S&P 500 was down 9.1% over just 15 trading sessions—marking the largest three-week drop since the COVID bear market. To put that into perspective, since 1990, this decline ranks in the top 1.5% of market drops over a similar timeframe.
No doubt, this level of volatility is tough to stomach. But as history shows, volatility is the price of admission to the stock market—nobody gets in for free. The good news? Historically, after declines of this magnitude, the S&P 500 tends to deliver above-average forward returns.
The Data Tells an Interesting Story
Looking at historical returns, the odds of the market being higher in the future remain in line with historical averages—but the magnitude of returns tends to be significantly stronger across multiple timeframes.
That said, risks remain. The ongoing uncertainty around tariffs continues to weigh on sentiment, and until this administration provides a clear and consistent policy framework, volatility will persist. But short of a recession, this appears to be a normal market drawdown—not a fundamental repricing.
Key Takeaway: Markets can digest bad news, but they struggle with uncertainty.
