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Every now and then, stocks fall—sometimes by a lot. But as the chart below shows, the S&P 500 Index has bounced back strongly after each instance of a 25% drop or more during the last 60 years. The lesson for investors: short-term pain has often been followed by long-term gains.

Annualized Returns Following Each 25% Drop in the S&P 500 Index (1950-present)
The 25% Drop Began... % Drop 1 Year 3 Year 5 Year 10 Year
6/26/62 -27.97 31.16 19.15 14.27 10.46
5/26/70 -36.06 32.14 12.99 5.04 7.07
10/3/74 -48.20 1.41 7.44 7.32 11.22
8/12/82 -27.11 44.15 21.84 27.63 17.56
12/4/87 -33.51 14.80 10.31 14.52 17.17
10/9/02 -49.15 0.24 0.63 3.97 3.29
3/9/09 -56.78 -6.91 1.23 10.02 11.97
3/23/20 -33.92 56.35 18.62    
9/30/22 -25.25 21.62      
Average -37.55 21.70 10.50 11.80 11.20
Median -33.92 23.00 10.30 10.00 11.20

As of 9/30/23. Past performance does not guarantee future results. Indices are unmanaged and not available for direct investment. Performance starts the first day of the following month. Source: Morningstar and Hartford Funds.

 

 

Talk to your financial professional today to help position your portfolio to achieve your long-term goals.

S&P 500 Index is a market capitalization-weighted price index composed of 500 widely held common stocks, and does not include the reinvestment of dividend payments.

Investing involves risk, including the possible loss of principal.

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