Market Outlook · March 07, 2022

Consider History: How S&P 500 Forward Returns Fared After 10% Corrections

Brent Ciliano

CFA | SVP, Chief Investment Officer

Phillip Neuhart

SVP, Manager of Institutional Portfolio Strategy

Key takeaways

  • S&P 500 returns following 10% corrections. The confluence of geopolitical risks, mixed earnings and tightening financial conditions weighing on economic growth has also pushed market volatility higher. Past S&P 500 corrections have typically been buying opportunities if the economy isn't in or entering a recession, with the S&P 500 returning +15% during the subsequent 12 months.
  • Market volatility doesn't last long, and 10% corrections in the S&P 500 have historically been good buying opportunities. 25 of 33 (76%) post-1950 corrections saw forward S&P 500 returns above zero, with 19 of the 33 (58%) seeing 12-month forward returns north of 10%.
  • As a forward indicator, higher levels of uncertainty have yielded higher forward market returns, not lower. Forward S&P 500 returns following elevated policy uncertainty readings have historically seen significantly higher returns, 1-, 3-, 6-, and 12-months post.
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