S&P 500's 4.3% slide sends investors to history books, and history says buy

The damage landed on Nov. 5: the S&P 500 fell 4.3% and the Nasdaq Composite dropped 5.5%, marking the market's roughest session since April 2, 2025. That earlier slump came when President Trump announced his import tariffs. The tariff sell-off didn't snowball, though. The market clawed back every loss in just over a month.

The rebound pattern is less unusual than it feels, according to data drawn from Morningstar, Ned Davis Research and Hartford Funds. Since 1981, the S&P 500 has recovered from its ten worst single-day declines within two months in eight of those cases. A year out, the index posted a positive return nine out of ten times, and cleared 20% on eight of those occasions.

The calendar also lines up. Since 1938, the S&P 500 has finished higher in 95% of midterm election years measured from November through November of the following year, averaging a 14.5% annual return over that stretch. In midterm years, the fourth quarter has been positive 84% of the time with an average 6.6% gain.

The first quarter after a midterm tends to run hotter still, with the S&P 500 up 95% of the time and an average return of 7.4%. The second quarter of that same following year has seen stocks rise 74% of the time, averaging 5%. The data in the report is current as of Dec. 31, 2025.