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Stocks are volatile amid the war between the U.S. and Iran, and investors may be feeling anxious.
However, volatility is a common feature of stock markets. In fact, drops of 1%, 2%, or even more in a single day, while nauseating at times, happen more often than you might think.
of S&P500 For example, U.S. stock indexes have fallen by more than 1% on 1,001 days over the past 30 years, an average of about 33 days a year, according to Morningstar Direct, which analyzed market data since 1996.
During the same period, the index fell at least 2% in 313 days, according to Morningstar. The average is about 10 days a year.
“That’s about once a month,” Charlie Fitzgerald III, an Orlando-based certified financial planner, said of the data.
“These little things happen pretty often,” said Fitzgerald, a founding member of Moisando Fitzgerald Tamayo, ranked No. 69 on CNBC’s 2025 Financial Advisors 100.
“That’s what the stock market does and has done for 100 years,” he said.
The decline came as investors weighed the prospect of escalating conflict in the Middle East earlier this week and how that could affect oil prices and the U.S. and global economies. The S&P 500, for example, closed 1% lower on Tuesday and was down about 2% at one point in the day.
“This is kind of a classic geopolitical shock,” Fitzgerald said.
Scott Wren, senior global market strategist at Wells Fargo Investment Institute, said in market commentary Wednesday that financial markets tend to take an “attack first, ask questions later” mentality when extrapolating from headlines about these disputes.
“We believe investors need to remain calm, read the headlines and stick to a well-conceived plan,” Wren wrote. “A diverse portfolio is one of the keys to that plan.”
One day is less important than long-term trends
On March 16, 2020, the day the coronavirus pandemic began, the S&P 500 index fell by about 12%. The stock price fell approximately 34% from February 19, 2020 to the market bottom on March 23, 2020. However, the stock rebounded strongly, returning to its previous highs by August. This is the fastest recovery ever for this species.
Most recently, the S&P 500 index fell nearly 5% on April 3, 2025, its worst day since June 2020, after President Donald Trump announced so-called “Emancipation Day” tariffs. The market fell about 12% from April 2nd to 8th, but fully recovered by just a month later, in early May.
According to Morningstar research, since 1996, there have been 21 days when the S&P 500 index has plunged more than 5%, which means that the average daily decline has been about 18 months.
Despite frequent stock market crashes, the S&P 500 index has gained an average of 0.03% per day over the past 30 years, resulting in a typical annual return of more than 10%, according to Morningstar.
As a result, as of Wednesday, a $10,000 investment in the S&P 500 in early 1996 would be worth about $192,000, Morningstar reported.
“Short-term shocks are difficult to predict and are often followed by a recovery,” said Amy Arnott, portfolio strategist at Morningstar.
“It’s better for investors to stay disciplined and focus on a healthy long-term asset allocation rather than get distracted by external events,” Arnott said.
A significant decline could be a good opportunity to rebalance.
Mr. Fitzgerald said that if the market continues to experience a relatively large decline in a short period of time, perhaps 5% to 10% or more, investors may be able to benefit from rebalancing.
For example, if the target ratio of stocks to bonds is 65% stocks and 35% bonds, if the value of stocks falls sharply, the ratio could drop to 50% stocks and 50% bonds, he said. Fitzgerald said investors could sell some of their bonds and use the proceeds to buy stocks to get back to their target ratio.
Such actions force investors to buy stocks when prices are low, he said. That way, when stocks recover, they can rebalance in the opposite way, he said.
