S&P 500 Index (SPX) Had Already Pulled Back 5% From Its Mid-February All-Time High

Before yesterday’s tariff-fueled selloff, the S&P 500 Index (SPX) had already pulled back 5% from its mid-February all-time high.

The S&P 500 Index (SPX) suffered a setback yesterday as rising interest rates and the looming threat of a government shutdown sparked selling pressure. This يأتي بعد عام من المكاسب القوية التي دفعت السوق إلى أعلى مستوياته على الإطلاق في وقت سابق من العام. كما أصبحت مساحة الس債券 أكثر صعوبة هذا العام.

Before yesterday’s tariff-fueled selloff, the SPX had already pulled back 5% from its mid-February all-time high. Sentiment surveys, such as the latest American Association of Individual Investors (AAII) poll, indicate investors are getting nervous. Is their concern justified? This week, I’m analyzing historical 5% pullbacks to see if it’s a threshold that increases the likelihood of a larger decline. I’m examining pullbacks from a few angles to see if we can gain insights into where we go from here.

Stocks After 5% Pullbacks

For the data below, I went back to 1950 and found each time the SPX fell 5% after reaching an all-time high. In the 30 days after the initial pullback, the SPX averaged a return of 1.9%, with 74% of the returns positive. The second table shows the typical one month returns since 1950 for the SPX was 0.75%, with 62% of the returns positive. From the table below, it indicates 5% pullbacks have been good short-term buying opportunities.

However, the returns over the next year, show slight underperformance. The last row of the table shows the percentage of time a new high was reached in the timeframe. So, 32% of the time, the SPX hit a new high in the next month. 68% of the time, a new high was reached within three months. One interesting statistic is that after the index pulled back 5%, there was a 65% likelihood of seeing a new high before seeing the pullback reached the correction level of 10%.

This is already the second 5% pullback of 2025. The SPX also experienced a 5% loss from a mid-January high. This made me curious if the second pullback of 5% within a short period meant anything different. The table below summarizes the data following the second pullback within a three-month period. The returns out to six months weren’t much different from the returns after a general 5% pullback.

The main difference is in the 12-month return column. In the year after these second 5% pullbacks, there’s more underperformance. The SPX averaged a return of 6.4% over the next year with 63% of the returns positive. The table above shows the typical 12-month return after a pullback was 8.3% with 70% of the returns positive. In the 30 times the SPX had a second 5% pullback within three months, 67% of the time, the index reached a new high before correction territory.

Stocks After 10% Pullbacks

For future reference (and hopefully, not near future), the table below shows how the SPX has performed in the aftermath of a 10% pullback which is often referred to as correction territory. The second table below shows the typical returns for comparison (it’s the same table we saw earlier). Just like with 5% returns, this does not seem to be a tipping point where things get significantly scarier.

Also, just like with the 5% pullback data, the short-term returns tended to outperform compared to normal market returns then the one-year returns slightly underperformed. However, in the case of a 10% pullback, it was basically a coinflip whether you see a new high next or a 20% loss from the high which is considered a recession. Specifically, 15 out of 29 times a new high was reached before the 20% pullback level was reached.