The S&P 500 index fell into correction territory on Thursday, dropping more than 10% from its record high set in February. The tech-heavy Nasdaq Composite also entered a correction, falling 14% from its all-time high reached in December. Investor confidence has been shaken by uncertainty surrounding President Donald Trump’s tariffs on imports from key trade partners.
On Thursday, Trump threatened to impose a 200% levy on champagne and other European spirits. While a correction can fuel fears of further losses, historical data shows that the S&P 500 tends to bounce back after reaching this milestone. According to data compiled by Ryan Detrick of the Carson Group, the S&P 500 averages a 3.1% return one month after entering a correction.
The benchmark’s return increases to 6.5% and 12% after three and six months, respectively. A year later, the S&P 500 sees an average return of 14.7%, based on data going back to 1950.
S&P 500 correction trends analyzed
However, these numbers only account for corrections and not bear markets, which occur when the S&P 500 falls 20% from a recent high. The S&P 500’s most recent bear run was in 2022, when the Federal Reserve began raising interest rates to combat inflation. The index has experienced 11 bear markets since 1950, according to Detrick.
Detrick noted that another bear market now would be unusual. “That would be three bears in 5 years, something we’ve never seen before. The previous closest three bears ever was 6.9 years between 1966 and 1973,” he said in a post on X (formerly Twitter).
In other news, Barclays upgraded British analytics stock RELX, calling it a potential safe haven in the current market environment. Analyst Nick Dempsey wrote in a Friday note, “We think RELX offers reliable growth in an environment where relative safe havens may be needed. The shares are not cheap vs history but not out of line with info services peers.”
Image Credits: Photo by Tech Daily on Unsplash
