A wave of red numbers has swept through the market, with billions of dollars erased following President Trump’s declaration of new import tariffs. The knee-jerk reaction has sparked fears of a prolonged downturn. Though, could this sharp decline actually signal a market bottom? Dutch analyst Michaël van der Poppe points to historical patterns that offer a glimmer of hope.

Historical Context: S&P 500’s “10% Plunge” Indicator

A two-day drop of 10% or more in the S&P 500 is a rare and alarming event. Historically, such dramatic declines have often, surprisingly, coincided with market bottoms. Van der Poppe highlights that this has only occurred three times before, each preceding a meaningful turning point:

1. October 1987 – Black Monday: the Dow Jones plummeted 22.6% on October 19, 1987. The two-day loss exceeded 10%. Panic stemming from automated trading systems and rising interest rates triggered the crash. however, a recovery commenced almost immediately. This event reshaped market regulations, leading to the implementation of circuit breakers designed to halt trading during extreme volatility—a safety net the U.S. still relies on today.
2. November 2008 – Great Financial Crisis: The collapse of Lehman Brothers sent shockwaves through the global financial system. The S&P 500 endured a two-day battering,shedding more than 10% of its value. Fears of systemic collapse loomed large. Retrospectively, this period marked a bottom, followed by a gradual recovery fueled by government intervention and quantitative easing—strategies that remain controversial but were deemed necessary to stabilize the economy.
3. March 2020 – COVID-19 Pandemic: The onset of the coronavirus pandemic brought public life to a standstill, and the stock market followed suit. The S&P 500 experienced a two-day decline of over 10%. Swift and aggressive action by central banks, coupled with massive stimulus packages, spurred a rapid recovery. The CARES Act,for example,provided direct financial assistance to millions of Americans and businesses,preventing a deeper economic catastrophe.

April 2025 – The Present Day: the introduction of new import tariffs by President Trump has shaken investor confidence, triggering a global market sell-off. The S&P 500 has registered a decline exceeding 10% over two days.

If history is any guide, this could represent a turning point.

Key Takeaways from Historical Patterns

In each of the previous instances, the market bottom occurred *during* the second day of the significant decline, not weeks or months later. Van der Poppe emphasizes, “This movement is rare, and historically it points to a soil.”

Thes moments share a common thread: sudden, unexpected panic. In hindsight, the most severe drop frequently enough marked the nadir. Though, it’s crucial to acknowledge the differences. Unlike the 2008 financial crisis or the COVID-19 pandemic,which stemmed from deep-seated systemic issues,the current downturn is fueled by policy decisions that could,in theory,be reversed or adjusted.This introduces a unique element of uncertainty.

Chance or Falcon swap?

Does this mean that we are now also at the start of a recovery? That is of course no certainty. But the pattern is striking and gives investors guidance. The market seems irrational in the moment, but frequently enough shows itself surprisingly consistent about the long term.

Nobody knows exactly when a market soil, but some signals are too strong to ignore. About 10%dive in two days is rare, it happened only four times in almost a hundred years. And every time it was the start of a new Bull market. Chance? Or is this a pattern that investors can use?

If history repeats itself, then the soil may already be reached, or it will come within a few days. That makes this the time to stay sharp. Panic is understandable, but those who remain calm may see opportunities. the market has more often shown that the best buying moments are at the low point.

Implications for U.S. Investors

For U.S. investors, this historical context provides a framework for understanding the current market volatility. It does not guarantee a swift recovery,but it suggests that the present downturn may not be the beginning of a prolonged bear market. It’s essential to consider several factors:

• Diversification: A well-diversified portfolio can definitely help mitigate risk during volatile periods.
• Long-Term Perspective: Avoid making rash decisions based on short-term market fluctuations. Focus on long-term investment goals.
• Professional Advice: Consult with a qualified financial advisor to assess your individual risk tolerance and investment strategy.

While history offers valuable insights, it’s not a crystal ball. The global economic landscape is constantly evolving, and unforeseen events can always disrupt market trends. However, understanding historical patterns can empower investors to make more informed decisions during times of uncertainty.