Longer View for stock
Stocks turned up the volatility to 11 in April.1 The decline of –10.5% over April 3–4 was the worst two-day stretch for the S&P 500 Index since March 12, 2020. Then, on April 9, the index gained 9.5%, the third-largest one-day return since 1987.
During these sorts of ups and downs, it’s helpful to zoom out and view market returns over the longer term. Trailing one-, three-, and fve-year returns were in line with historical ranges, with or without the rally on April 9. And the effect of a single day’s return becomes muted when expanding the measurement period. For example, while the one-year return swung from –2.9% to 6.2% after April 9, the fve-year return budged much less, from 14.0% to 16.4%.
This is not meant to trivialize recent market volatility. Rather, it’s a reminder that when it comes to stocks, taking the long view may help investors avoid reacting to short-term market movements. The nine-percentage-point difference in one-year return between April 8 and 9 illustrates the danger of panicking and divesting just one day early.