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2025-04-08

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After Two Big Days of Selloffs, Here’s What History Suggests Will Happen Next

Sometimes, the sharper the fall, the quicker the reboundFriday’s nearly 6% drop for the S&P 500 left it down more than 10% over two days.It’s a miserable start to the week for equity investors globally as tremors from the Trump tariffs continue to reverberate through markets.Fresh falls for S&P 500 futures early Monday follow a decline of 10.5% over just the previous two sessions — the biggest such slide since the onset of the pandemic in March 2020.What can history tell us about what may happen

After Two Big Days of Selloffs, Here’s What History Suggests Will Happen Next

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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Short-term market returns, therefore, tend to be mixed. However, the probability of markets climbing increases significantly as the time horizon expands.Let’s drill down into the details.Previous periods containing mammoth two-day declines were the 1987 crash, the 2008 great financial crisis, and the COVID-19-related turmoil in 2020, as the table below shows.<img src=\"https://community-static.tradeup.com/news/ebcb7aea33b2604ee21b6f45bcb43a5c\" title=\"\" tg-width=\"1046\" tg-height=\"548\"/>From this, the Truist team made three observations.Volatility clusters: Big down days don’t typically occur in isolation, they noted. “History shows that several of the S&amp;P 500’s largest two-day declines were followed by some of the biggest two-day increases over the next 30 days (but also more down days).”Short-term returns are mixed: The likelihood of the stock market rising significantly over the next few months following big two-day selloffs is mixed. In some cases, particularly in the fall of 2008, there was still a decent amount of downside, they noted.The longer time horizon increases the probability of gains: As the table below shows, over the longer term, the returns improved markedly. That happened quicker after the initial two-day decline, such as after Black Monday.<img src=\"https://community-static.tradeup.com/news/a4b3a8b5a2a53874e9a5dbd02692da1e\" title=\"Source: Truist\" tg-width=\"1046\" tg-height=\"549\"/>Source: TruistBut what if the market’s current plunge presages a recession? Stocks bounced back quickly after Black Monday because, at the time, that was not the market’s reason for the crash. But the damage can be prolonged if investors reckon economic contraction will clobber corporate earnings.The Truist economics analysts saw a 50/50 chance that the Trump tariffs would cause a recession in the U.S., with the probability rising the longer the trade levies remain in place.Historically, the median S&amp;P 500 decline around recessions is 24%, the Truist team noted. On that basis, the S&amp;P 500’s current pullback of 17% since late February suggests the market is pricing in roughly a 60% to 70% chance of recession, they added.“The glass half empty view is the market has further downside potential if a recession materializes, and this could be a worse than the ‘typical’ recession,” Truist said. “The glass half full view is the market is already pricing in a decent amount of the recession risk relative to the complacency at the February highs. Also, once markets find their low during a recession, the snapback tends to be sharp.”So, what should investors do? One thing to recognize is that from a technical perspective, based on where futures suggest the S&amp;P 500 will trade on Monday, the index is nearing a 50% retracement of the 2022 to 2025 bull market, which overlaps with the previous peak in 2021. “This will be looked to as a potential near-term support level,” Truist said.<img src=\"https://community-static.tradeup.com/news/48752c12e5ace5f0c89a559c12f2e638\" title=\"Source: Truist\" tg-width=\"1043\" tg-height=\"698\"/>Source: TruistTruist said its message since February has been to adopt a more cautious stance, though given how much markets have now declined, it’s not the time to become more negative — at least not in the short term.“Markets are now at least better discounting some of the uncertainty, and the bar for positive surprises has been reset lower. Thus, there is a risk of further market downside, but also a little bit of good news could go a long way,” they concluded.</body></html>","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>After Two Big Days of Selloffs, Here’s What History Suggests Will Happen Next</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nAfter Two Big Days of Selloffs, Here’s What History Suggests Will Happen Next\n</h2>\n\n<h4 class=\"meta\">\n\n\n<div class=\"head\" \">\n\n\n<div class=\"h-thumb\" style=\"background-image:url(https://static.tigerbbs.com/150f88aa4d182df19190059f4a365e99);background-size:cover;\"></div>\n\n<div class=\"h-content\">\nDow Jones \n2025-04-08 13:25\n</div>\n\n</div>\n\n\n</h4>\n\n</header>\n<article>\n<html><head></head><body>Sometimes, the sharper the fall, the quicker the rebound.It’s a miserable start to the week for equity investors globally as tremors from the Trump tariffs continue to reverberate through markets.S&amp;P 500 fell 0.2% on Monday follow a decline of 10.5% over just the previous two sessions — the biggest such slide since the onset of the pandemic in March 2020.What can history tell us about what may happen next after that selloff?In a new note published Sunday, Truist market strategists Keith Lerner and Jake Reid ran the numbers.Their key takeaways were that such huge two-day market drawdowns are often followed by significant moves up or down over the next weeks. Short-term market returns, therefore, tend to be mixed. However, the probability of markets climbing increases significantly as the time horizon expands.Let’s drill down into the details.Previous periods containing mammoth two-day declines were the 1987 crash, the 2008 great financial crisis, and the COVID-19-related turmoil in 2020, as the table below shows.<img src=\"https://community-static.tradeup.com/news/ebcb7aea33b2604ee21b6f45bcb43a5c\" title=\"\" tg-width=\"1046\" tg-height=\"548\"/>From this, the Truist team made three observations.Volatility clusters: Big down days don’t typically occur in isolation, they noted. “History shows that several of the S&amp;P 500’s largest two-day declines were followed by some of the biggest two-day increases over the next 30 days (but also more down days).”Short-term returns are mixed: The likelihood of the stock market rising significantly over the next few months following big two-day selloffs is mixed. In some cases, particularly in the fall of 2008, there was still a decent amount of downside, they noted.The longer time horizon increases the probability of gains: As the table below shows, over the longer term, the returns improved markedly. That happened quicker after the initial two-day decline, such as after Black Monday.<img src=\"https://community-static.tradeup.com/news/a4b3a8b5a2a53874e9a5dbd02692da1e\" title=\"Source: Truist\" tg-width=\"1046\" tg-height=\"549\"/>Source: TruistBut what if the market’s current plunge presages a recession? Stocks bounced back quickly after Black Monday because, at the time, that was not the market’s reason for the crash. But the damage can be prolonged if investors reckon economic contraction will clobber corporate earnings.The Truist economics analysts saw a 50/50 chance that the Trump tariffs would cause a recession in the U.S., with the probability rising the longer the trade levies remain in place.Historically, the median S&amp;P 500 decline around recessions is 24%, the Truist team noted. On that basis, the S&amp;P 500’s current pullback of 17% since late February suggests the market is pricing in roughly a 60% to 70% chance of recession, they added.“The glass half empty view is the market has further downside potential if a recession materializes, and this could be a worse than the ‘typical’ recession,” Truist said. “The glass half full view is the market is already pricing in a decent amount of the recession risk relative to the complacency at the February highs. Also, once markets find their low during a recession, the snapback tends to be sharp.”So, what should investors do? One thing to recognize is that from a technical perspective, based on where futures suggest the S&amp;P 500 will trade on Monday, the index is nearing a 50% retracement of the 2022 to 2025 bull market, which overlaps with the previous peak in 2021. “This will be looked to as a potential near-term support level,” Truist said.<img src=\"https://community-static.tradeup.com/news/48752c12e5ace5f0c89a559c12f2e638\" title=\"Source: Truist\" tg-width=\"1043\" tg-height=\"698\"/>Source: TruistTruist said its message since February has been to adopt a more cautious stance, though given how much markets have now declined, it’s not the time to become more negative — at least not in the short term.“Markets are now at least better discounting some of the uncertainty, and the bar for positive surprises has been reset lower. Thus, there is a risk of further market downside, but also a little bit of good news could go a long way,” they concluded.</body></html>\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"BK4585":"ETF&股票定投概念","BK4588":"碎股","LU1815336091.USD":"THREADNEEDLE (LUX) GLOBAL SMALLER COMPANIES \"AUP\" (USD) INC","BK4550":"红杉资本持仓","BK4534":"瑞士信贷持仓",".IXIC":"NASDAQ Composite","BK4202":"服装、服饰与奢侈品","BK4216":"消闲设施","BK4581":"高盛持仓","BK4504":"桥水持仓",".DJI":"道琼斯","BK4559":"巴菲特持仓","LU0757428866.USD":"THREADNEEDLE (LUX) GLOBAL SMALLER COMPANIES \"AE\" (USD) ACC","BK4209":"餐馆",".SPX":"S&P 500 Index"},"source_url":"https://dowjonesnews.com/newdjn/logon.aspx?AL=N","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"2525162920","content_text":"Sometimes, the sharper the fall, the quicker the rebound.It’s a miserable start to the week for equity investors globally as tremors from the Trump tariffs continue to reverberate through markets.S&P 500 fell 0.2% on Monday follow a decline of 10.5% over just the previous two sessions — the biggest such slide since the onset of the pandemic in March 2020.What can history tell us about what may happen next after that selloff?In a new note published Sunday, Truist market strategists Keith Lerner and Jake Reid ran the numbers.Their key takeaways were that such huge two-day market drawdowns are often followed by significant moves up or down over the next weeks. Short-term market returns, therefore, tend to be mixed. However, the probability of markets climbing increases significantly as the time horizon expands.Let’s drill down into the details.Previous periods containing mammoth two-day declines were the 1987 crash, the 2008 great financial crisis, and the COVID-19-related turmoil in 2020, as the table below shows.From this, the Truist team made three observations.Volatility clusters: Big down days don’t typically occur in isolation, they noted. “History shows that several of the S&P 500’s largest two-day declines were followed by some of the biggest two-day increases over the next 30 days (but also more down days).”Short-term returns are mixed: The likelihood of the stock market rising significantly over the next few months following big two-day selloffs is mixed. In some cases, particularly in the fall of 2008, there was still a decent amount of downside, they noted.The longer time horizon increases the probability of gains: As the table below shows, over the longer term, the returns improved markedly. That happened quicker after the initial two-day decline, such as after Black Monday.Source: TruistBut what if the market’s current plunge presages a recession? Stocks bounced back quickly after Black Monday because, at the time, that was not the market’s reason for the crash. But the damage can be prolonged if investors reckon economic contraction will clobber corporate earnings.The Truist economics analysts saw a 50/50 chance that the Trump tariffs would cause a recession in the U.S., with the probability rising the longer the trade levies remain in place.Historically, the median S&P 500 decline around recessions is 24%, the Truist team noted. On that basis, the S&P 500’s current pullback of 17% since late February suggests the market is pricing in roughly a 60% to 70% chance of recession, they added.“The glass half empty view is the market has further downside potential if a recession materializes, and this could be a worse than the ‘typical’ recession,” Truist said. “The glass half full view is the market is already pricing in a decent amount of the recession risk relative to the complacency at the February highs. Also, once markets find their low during a recession, the snapback tends to be sharp.”So, what should investors do? One thing to recognize is that from a technical perspective, based on where futures suggest the S&P 500 will trade on Monday, the index is nearing a 50% retracement of the 2022 to 2025 bull market, which overlaps with the previous peak in 2021. “This will be looked to as a potential near-term support level,” Truist said.Source: TruistTruist said its message since February has been to adopt a more cautious stance, though given how much markets have now declined, it’s not the time to become more negative — at least not in the short term.“Markets are now at least better discounting some of the uncertainty, and the bar for positive surprises has been reset lower. 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