Here's What Usually Happens to Markets After the S&P 500 Drops 5 Percent in a Week
Last week was a brutal one for the Standard & Poor's 500 index, with stocks tumbling more than 5 percent for the first time since 2011. The bloodbath is continuing today.
As Bespoke Investment Group points out, a weekly drop of more than 5 percent has only happened 28 other times since 1980. If you're trying to decide what to do this week, maybe Bespoke's chart will help. It gives you a look at what happened in the S&P 500 in the weeks following a 5 percent decline. On average, the market is relatively flat the next week, up 1.65 percent over the next four weeks, and up close to 5 percent over the next 12 weeks. Also important to note is that 60 percent of the time, the index moves higher the following week.
Some of the standout years include huge drawdowns of more than 20 percent over the next 12 weeks in 1987 and 2008. On the opposite side of the spectrum, there were massive turnarounds in 1998 and 2009.
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