The S&P 500 (^GSPC +0.31%) fell 4.36% on Thursday, Nov. 5, ending at 7,353.73. It was the index’s worst day since April 4, 2025, when it lost nearly 6%.
What made Thursday’s drop unusual was where it started. The index had closed Wednesday at 7,688.62, under 2% off its record close of 7,818.93 on Oct. 6.
Tech shares led the way down, and chip stocks fell hardest, with the Philadelphia Semiconductor Index losing around 12%.
Two poor chipmaker reports and a midterm election that had investors nervous about new limits on artificial intelligence data centers both hurt the group.
I wanted to check how rare this mix is. Looking through Yahoo Finance’s daily closing prices (dividends left out), I counted 56 earlier days since 1950 when the S&P 500 dropped 4% or more. Only two of them began with the index within 2% of a record close. One was Sept. 26, 1955, and the other was Oct. 13, 1989.
Image source: Getty Images.
Two very different years
The 1955 drop was on the first trading day after word of President Dwight Eisenhower’s heart attack. The S&P 500 had closed at a record the Friday before, and it fell around 6.6% that Monday.
The year that followed went pretty smoothly. A month later, the index was flat. It was up around 6% after three months and about 13% after six.
And a year after the drop (252 trading days), it was up about 7%. Even its lowest close in that time was only about 4% below where it ended on Sept. 26.
The 1989 drop came on a Friday the 13th. That day, the group behind a $6.75 billion labor-management buyout of UAL, the parent of United Airlines, couldn’t get enough financing. The S&P 500 fell around 6.1% that day, from about 1.2% below the record close it set on Oct. 9.
The year that followed was rockier. The index was up around 2% a month later and about 3% after six months. But it was down about 10% a year after the drop, as the economy slipped into the 1990-1991 recession. At its lowest close over that year, the index was around 11% below its Oct. 13 level.
In short, the two closest matches split. Two cases can’t say much by themselves.
Most big drops started from much lower
The broader record looks a lot better. Of the 56 earlier drops of 4% or more since 1950, 47 were followed by a higher index 12 months on, with a median gain of around 23%. And the odds improved the longer investors waited. The index was up a month later in 36 of the 56 cases, after three months in 41, after six months in 43, and after a year in 47.
Of course, most of these drops came in very different conditions. In 47 of the 56 cases, the index was already at least 10% below its record when the drop hit, and the typical one started around 24% below it. Over a third of them (21) came during 2008 and 2009 alone.
This 23% median gain, then, mainly reflects rebounds from deep in sell-offs that were already well underway. Thursday’s drop started from near the peak.
Limit the list to drops that began within 5% of a record, and five cases are left (1955, 1986, 1989, 1997, and 2018). Four of the five were up a year later. But the median gain was around 7%, well below the full group’s.
Sure, five cases is still a tiny sample. But I think it’s a fair reminder that the largest rebounds in this record followed much bigger falls than the one investors just saw.
Today’s Change
(0.31%) +23.13
Index Level
7,376.86
Key Data Points
Day’s Range
7,369.55 – 7,444.20
52wk Range
6,316.91 – 7,844.52
Is Thursday’s drop a reason to sell?
Even after Thursday, the S&P 500 is up around 7% in 2026 as I write, and it’s about 6% off its Oct. 6 record. Its price-to-earnings ratio, at around 25, is also far above its long-term median of about 15.
In the end, this history doesn’t point in one direction. And the wider record arguably looks strong partly because most of its big drops started from much lower levels.
I wouldn’t sell an S&P 500 index fund over Thursday’s drop. For a buy-and-hold investor, selling after a 4% day has usually meant missing what came next, as 47 of the 56 earlier cases were up a year later.
But I also wouldn’t count on a 20%-plus rise from here just because so many past drops were followed by one. Starting this close to a record, and at that valuation, the lower gain after 1955 or even the loss after 1989 might be the more realistic guide.
