Just How Bad is the Stock Market’s Current Sell-Off?

U.S. stocks had their worst day of an already bad year on Monday as investors raced into safe-haven assets amid growing recession fears. 

The S&P 500 fell 2.7% on Monday, its biggest one-day drop since December. The index has notched only two worse days in the current bull market, which began in late 2022: December 18, 2024, when the Federal Reserve scaled back its rate cut forecast, and August 5, 2024, when the unwinding of a popular leveraged trade briefly sank U.S. equities. 

The last six days have been particularly punishing. The S&P 500 fell nearly 1.8% last Monday when President Trump confirmed a 25% tariff on Canadian and Mexican imports would go into effect the following day. In the five days since, stocks have fallen another 4% despite Trump again partially delaying those tariffs. The S&P 500’s 5.7% decline between last Monday and today stands as the index’s worst 6-day stretch since September 2022. 

Stocks were rattled Monday by comments the President made over the weekend. Trump, in an interview with Fox News aired on Sunday, declined to say whether he expects the U.S. to enter a recession this year. Instead, he said the economy would experience “a period of transition” as his tariffs take effect. The comments echoed his address to Congress last week, in which he said there would “be a little disturbance, but we’re OK with that.”

Is the S&P 500 In Store For a Correction?

It’s been 340 trading days since the S&P 500 last corrected, an abnormally long time. According to research from LPL Financial, since 1929, the average time between S&P 500 corrections has been about 173 days.

Monday’s sell-off brought the S&P 500 closer to a correction than any other pullback in the last year. Stocks fell about 8.4% from peak to trough during their August slump, and they retreated about 4% during their December pullback. With Monday’s losses, the S&P 500 has fallen 8.6% off its all-time high from three weeks ago.

The recent slump, however, has been a much swifter decline than the last correction, which played out over three months, from July 31 to October 27, 2023. The S&P 500 fell 10.3% in that time. It was, however, a short-lived correction; the index rebounded on October 30, the next trading day, and resumed its bull run.