CORRECTION: Market Recap-Week Ending March 7, 2025
Good morning,
As a follow up to yesterday’s market recap, I wanted to pass along some narrative we received yesterday from LPL that better explains what I tried to write in my conclusion.
Pullback Perspective
JEFFREY BUCHBINDER, CFA | CHIEF EQUITY STRATEGIST
- After the worst week for stocks since September, tariff uncertainty is dragging stocks down again this morning. At the open, the S&P 500 drawdown is over 7% and the Nasdaq’s is over 11%.
- Until markets get some more clarity on where tariffs and trade relationships will settle out, staging a comeback rally may prove difficult.
- Pullbacks of 5–10% are quite common — the S&P 500 averages three of them per year. Corrections (10–20% drops) are less common, but we may be due for one. The S&P 500 experiences one 10% correction per year, on average. The last one came back in October 2023 when the index fell 10.3% from peak to trough.
- The maximum drawdown for the S&P 500 has averaged about 14% per year since 1980. In positive years, the average maximum drawdown is still 11%. Simply put, this amount of volatility is normal. It reminds us why diversification is important and gives long-term investors an opportunity to buy stocks “on-sale” and enhance returns over time.
- We would expect the market’s bottoming process to begin playing out once markets get some clarity on where tariffs might land and can adjust economic and profit expectations accordingly. That timetable is more likely to be measured in months rather than weeks. Technical evidence that it’s time to buy the dip is also lacking.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
