The recent pullback in the U.S. stock market has intensified, with the S&P 500 index falling more than 5% from its historical high. In the backdrop of soaring energy prices and rising geopolitical risks, investors are reassessing their risk exposure.
According to Reuters' analysis based on LSEG data, since 1957, the S&P 500 index has seen pullbacks of 5% or more about 60 times. In most cases, the declines have been limited, with only 22 instances expanding further to more than 10%, and about 10 evolving into bear markets with declines of over 20%.
Historical data shows that after a 5% pullback, the market typically rebounds. In similar scenarios, the median gains one month, three months, and six months later are 2.44%, 4.82%, and 7.01%, respectively.
However, current market sentiment remains cautious. The inflationary pressure brought about by the energy shock and the duration of the Middle East conflict are key variables in determining the depth of this adjustment.
