Chart of the Week

Amid a flurry of tariff-related headlines, the S&P 500 Index fell a cumulative 12.1% during the four trading days between April 3 and April 8 before spiking 9.5% in one day, on April 9. Recent events have investors questioning how low the market may go as ongoing uncertainty has driven dramatic swings. However, historical data suggests that such swings — both positive and negative — are not uncommon during periods of volatility.

Our analysis shows that the best and worst days have often occurred close together, and often when markets were most volatile (see chart). Over the past 30 years, three of the 30 best days and five of the 30 worst days occurred during the eight trading days between March 9 and March 18, 2020.

Disentangling the best and worst days can be quite difficult, history suggests, since they have often occurred in a very tight time frame, sometimes even on consecutive trading days. In our view, these findings argue strongly for most investors to remain invested in equity markets, even during periods of high volatility.

Each asset class has its own risk and return characteristics. The level of risk associated with a particular investment or asset class generally correlates with the level of return the investment or asset class might achieve. Stock markets are volatile. Stock values may fluctuate in response to general economic and market conditions, the prospects of individual companies, and industry sectors.

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