The global equity weakness continued yesterday, with consecutive 3% drops for the S&P 500 Index for the first time since August 2015. It might be hard to believe, but exactly one week ago today the S&P 500 was making a new all-time high. What a difference seven days makes!

Yes, the uncertainty that that coronavirus outbreak has caused has sparked the weakness we’ve seen over the past week, but at times like these, it is important to remember that markets go both up and down. “The S&P 500 has pulled back more than 5% from the recent peak, which has many investors on edge,” said LPL Financial Senior Market Strategist Ryan Detrick. “Importantly, most years see stocks pull back at least 5% multiple times. Even as good as last year was, stocks still pulled back 5% twice.”

As shown in the LPL Chart of the Day, since 1950, the S&P 500 has seen an average of nearly three separate 5% pullbacks per year. Although a 1995 or 2017 can happen (years which don’t see any 5% pullbacks), it is much more common for there to be multiple 5% pullbacks in any given year.

The recent bout of volatility has sent many investors on edge, but we continue to expect a return to pre-outbreak levels of global economic growth and corporate profits within the next several months, which should help continue to power this record-long bull market and economic expansion through 2020.

For more of our investment insights and thoughts on the coronavirus, check out our latest LPL Market Signals podcast Coronavirus Risk and Global Growth.

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This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.

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This Research material was prepared by LPL Financial, LLC.

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