9 of 10 Worst Market Dips Yield Positive S&P Returns
On Nov. 5, the stock market experienced one of its biggest one-day declines in over a year, with the S&P 500 dropping 4.3% and the Nasdaq Composite sinking 5.5%.
That decline marked the market’s worst single session since April 2, 2025, when President Trump announced his import tariffs. While those earlier tariff-driven drops could have indicated a prolonged sell-off, they proved temporary as the market fully recovered its losses in just over a month.
Historical data shows that such sharp pullbacks frequently precede strong recoveries. Since 1981, the S&P 500 has rebounded from its ten worst single-day drops within two months on eight separate occasions.
The S&P 500 has generated a positive return one year after these major market dips nine out of 10 times, recording a return exceeding 20% on eight of those occasions, per data from Morningstar, Ned Davis Research, and Hartford Funds.
| Historical Event | Date | 1-Day Decline | Days to Recover | 1-Year Return |
|---|---|---|---|---|
| Black Monday | Oct. 19, 1987 | -20.5% | 264 | 23.2% |
| Covid Volatility | March 16, 2020 | -12% | 19 | 66.1% |
| Covid Volatility | March 12, 2020 | -9.5% | 20 | 59% |
| Great Recession | Oct. 15, 2008 | -9% | 15 | 20.8% |
| Great Recession | Dec. 1, 2008 | -8.9% | 6 | 35.9% |
| Great Recession | Sept. 2, 2008 | -8.8% | 410 | -4.1% |
| Black Monday Aftershock | Oct. 26, 1987 | -8.3% | 5 | 23.6% |
| Great Recession | Oct. 9, 2008 | -7.6% | 3 | 17.8% |
| Covid Volatility | March 9, 2020 | -7.6% | 57 | 41.1% |
| Asian Financial Crisis | Oct. 27, 1997 | -6.9% | 8 | 21.5% |
Beyond historical rebound patterns, the market is currently entering a traditionally bullish calendar phase. Since 1938, the S&P 500 has risen in 95% of midterm election years from November through November of the following year, delivering an average annual return of 14.5% during those 12 months.
Political composition in Washington also plays a measurable role in historical market performance. The S&P 500 has historically performed best when Congress is divided, posting an average return of 17% under a Democratic president with a split Congress, and 13.7% under a Republican president with a split Congress.
Tech stocks bore the brunt of the recent sell-off. Newly elected officials called for a pause on ongoing data center infrastructure build-outs, creating short-term sector pressure.
Major technology hyperscalers maintain contingency plans to address these political headwinds. Firms retain the flexibility to shift capital expenditures overseas or toward domestic regions like Wyoming.
Long-term options for digital infrastructure expansion include building data centers offshore, underwater, or eventually in outer space.
Investors looking at individual equities during the pullback might examine artificial intelligence semiconductor producers like Broadcom and Advanced Micro Devices, alongside cloud hyperscalers such as Alphabet and Amazon.
Core portfolio strategies during market volatility often lean toward dollar-cost averaging into index exchange-traded funds. Investors deploying extra capital can utilize funds like the Invesco QQQ Trust, which tracks the Nasdaq-100 index, or the Vanguard S&P 500 ETF for broad market exposure.