A Quick Look at Previous 4% Down Moves in the S&P 500

Indeed today will be remembered for quite some time, but as history tells us, a 4.7% down move in the S&P 500 is not the end of the world by any means.  In this post, I list the previous 4.00% down moves in the S&P index and then run a study on what historically has occurred if you bought the S&P on these 4% down days.

The following table ranks the top 20 largest one-day percentage declines in the S&P:

The data are from Yahoo Finance and trace back to 1950 (to today), thus it does not include the 1930s Stock Market.

The largest one-day decline since 1950 ocurred 21 years ago as price plunged 20% in a day (mirroring that of the 1929 crash).  In fact, the 1987 – 1988 period was extremely volatile, as these two years encompass six of the largest 20 price declines since 1950.

You can look at the dates to determine when these price declines happened and can pull up your own charts of the S&P 500 to see what happened before and after these declines.

To put things into perspective, today’s 4.7% rout was actually the 14th worst decline since 1950, and was not the bloodbath some had expected and certainly today’s decline didn’t set any percentage records.

I know that’s no comfort for those who lost money in today’s market, and certainly a near 5% down move in the S&P 500 is certainly significant.

The fact that the S&P 500 notched a new closing low for 2008 is extremely significant.

I’ll continue to provide insights, updates, and charts as they become available.