After significant declines, stocks have tended to break even quickly. One year after each of the S&P 500 Index’s 10 worst one-day drops (prior to 2020), the Index notched double-digit positive returns in all but one instance—and remained positive three and five years later, too. This is a hopeful sign for long-term investors since three of the worst single-day declines occurred in 2020. The chart below doesn’t include reinvested dividends, which would have made the returns even higher.
10 Worst Single-Day Percent Declines for US Stocks 1980–2020 (as of 9/30/20)
|One-Day Fall (%)||# Days To Reach Previous High||Return After 1 Year||Return After 3 Years||Return After 5 Years|
|1. October 19, 1987||Black Monday||20.47||264||23.19||11.59||13.03|
|2. March 16, 2020||COVID-19 Pandemic
|3. March 12, 2020||COVID-19 Pandemic
|4. October 15, 2008||Global Financial Crisis
|5. December 1, 2008||Global Financial Crisis
|6. September 29, 2008||Global Financial Crisis||8.79||410||4.14||1.60||8.87|
|7. October 26, 1987||Black Monday 2.0||8.28||5||23.59||10.20||12.92|
|8. October 9, 2008||Global Financial Crisis
|9. March 9, 2020||COVID-19 Pandemic
|10. October 27, 1997||Asian Financial Crisis
Past performance does not guarantee future results. Data sources: Morningstar, Ned Davis Research, and Hartford Funds, 9/20. Data shown is for the S&P 500 Price Index as of 9/30/20 and does not include the reinvestment of dividend payments. Indices are unmanaged and not available for direct investment.
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S&P 500 Index is a market capitalization-weighted price index composed of 500 widely held common stocks.