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Here's What Usually Happens to Markets After the S&P 500 Drops 5 Percent in a Week

Bloomberg, 24th September 2015 by Julie Verhage

Let's look at history

Last week was a brutal one for the Standard & Poor's 500 index, with stocks tumbling more than 5 percent for the first time since 2011. The bloodbath is continuing today. 

As Bespoke Investment Group points out, a weekly drop of more than 5 percent has only happened 28 other times since 1980. If you're trying to decide what to do this week, maybe Bespoke's chart will help. It gives you a look at what happened in the S&P 500 in the weeks following a 5 percent decline. On average, the market is relatively flat the next week, up 1.65 percent over the next four weeks, and up close to 5 percent over the next 12 weeks. Also important to note is that 60 percent of the time, the index moves higher the following week. 

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