Tariff-related concerns have sent stocks reeling over the past month, with the S&P 500 (^GSPC) down about 5% year to date as of Thursday morning. Investors may want to remember that while policy shifts are unsettling, pullbacks of 5% to 10% in the benchmark index are not uncommon.
“On average, the index experiences three drawdowns of between 5% and 10% each year,” Jeff Buchbinder, chief equity strategist at LPL Financial, wrote in a note to clients. “In fact, the S&P 500 has had at least one 5% pullback in 94% of years going back to 1928 (including its predecessor S&P 90 Index).”
Buchbinder’s advice remains clear: “Be patient, stay invested, and most importantly, don’t panic.”
According to the note, stocks typically experience a correction of over 10% once a year, even in favorable years. With no corrections in 2024, a pullback was expected. Despite the volatility, stocks have averaged a 13% annual return since 1980.
Buchbinder has a year-end price target for the S&P 500 in a range offrom 6,275 to 6,375, aligning with other Wall Street expectations.