The index fell over 2.5% Friday, its steepest decline in 2024, following a 4.5-month stretch without a 2% loss.
The S&P 500 dropped more than 2.5% last Friday, marking its worst single-day performance of the year. The decline ended a 4.5-month streak without a 2% daily loss, surprising traders as the Cboe Volatility Index (VIX) closed at 15.40 the prior day, signaling low expected volatility.
Historical data since 2010 shows the index typically outperforms average returns after 2%+ declines, with stronger rebounds outweighing deeper losses. Short-term positive returns matched typical results, while longer-term performance slightly exceeded averages. The recent drop was unusual, as it followed a prolonged low-volatility period rather than clustering with other large moves.
The analysis suggests such pullbacks often precede stronger recoveries, though the isolated nature of this decline may limit immediate market reactions.