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What happens after software and services stocks fall 20% from their high?
It has happened 20 times since 1968. A year after it began, the S&P 500 was up 12 of 20 times, with a median move of +19.4%. On an ordinary day in the same years the median was +10.6%, up 74% of the time.
Sector: Services and software more than 20% below its 1-year high. Not true on 2026-09-25.
What came next
| 1 month later | 1 year later | 3 years later | |
|---|---|---|---|
| S&P 500 | +2.6% 75% up · n 20 · normal +1.1% | +19.4% 60% up · n 20 · normal +10.6% | +38.3% 85% up · n 20 · normal +30.1% |
| Gold | -1.3% 45% up · n 20 · normal +0.1% | -7.3% 35% up · n 20 · normal +5.9% | +12.9% 65% up · n 20 · normal +14.5% |
| Oil | 0.0% 45% up · n 20 · normal 0.0% | -0.8% 50% up · n 20 · normal +3.0% | +6.0% 50% up · n 20 · normal +19.6% |
| 10-year yield (pts) | -0.00 pts 45% up · n 20 · normal -0.01 pts | -0.55 pts 30% up · n 20 · normal -0.02 pts | -1.16 pts 30% up · n 20 · normal -0.27 pts |
| Inflation, CPI y/y (pts) | +0.34 pts 74% up · n 19 · normal -0.01 pts | -0.97 pts 30% up · n 20 · normal +0.01 pts | -1.01 pts 30% up · n 20 · normal -0.26 pts |
| Unemployment rate (pts) | +0.10 pts 55% up · n 20 · normal 0.00 pts | +0.40 pts 65% up · n 20 · normal -0.30 pts | +0.55 pts 60% up · n 20 · normal -0.50 pts |
Median move after each episode began, how often it rose, and how many episodes had data. "Normal" is the same move from any trading day in the same years.
Every time it happened
- 2022-02-18 · true for 222 trading days · S&P 500 a year later: -6.2%
- 2020-03-09 · true for 21 trading days · S&P 500 a year later: +41.1%
- 2018-12-21 · true for 2 trading days · S&P 500 a year later: +33.3%
- 2011-08-19 · true for 1 trading day · S&P 500 a year later: +26.2%
- 2008-09-04 · true for 217 trading days · S&P 500 a year later: -17.8%
- 2008-07-02 · true for 18 trading days · S&P 500 a year later: -28.9%
- 2008-03-03 · true for 8 trading days · S&P 500 a year later: -47.7%
- 2002-04-11 · true for 253 trading days · S&P 500 a year later: -21.3%
- 2000-04-11 · true for 434 trading days · S&P 500 a year later: -22.3%
- 1998-08-31 · true for 16 trading days · S&P 500 a year later: +37.9%
- 1990-09-24 · true for 25 trading days · S&P 500 a year later: +27.3%
- 1990-08-23 · true for 2 trading days · S&P 500 a year later: +28.4%
- 1987-10-19 · true for 238 trading days · S&P 500 a year later: +24.3%
- 1984-05-22 · true for 22 trading days · S&P 500 a year later: +22.5%
- 1984-02-23 · true for 8 trading days · S&P 500 a year later: +16.2%
- 1981-09-25 · true for 1 trading day · S&P 500 a year later: +9.4%
- 1980-03-24 · true for 14 trading days · S&P 500 a year later: +35.6%
- 1973-09-11 · true for 361 trading days · S&P 500 a year later: -33.6%
- 1973-07-02 · true for 5 trading days · S&P 500 a year later: -18.1%
- 1970-04-22 · true for 164 trading days · S&P 500 a year later: +22.9%
- 20 separate episodes: a new one starts after 30 days without a match, so one long selloff counts once.
- Try enough situations and one will look like an edge by chance.
- Macro numbers are as published at the time. Stocks include companies that later died.
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