Global markets have experienced heightened volatility following former U.S. President Donald Trump’s announcement of “reciprocal” tariffs. Equity indices posted significant losses amid concerns over escalating trade tensions, potential retaliatory measures, and the broader implications for global economic growth.
While the immediate market reaction has been sharp, taking a step back is important. History consistently shows that markets have an extraordinary ability to recover — and often rally — after periods of geopolitical or economic stress.
In the table below you will see 31 major global crisis events since 1940 and the reaction of the Dow Jones Industrial Average — everything from wars and recessions to terrorist attacks and pandemics. Here’s what the data shows:
- On average, it takes just 18 days from the start of a crisis for the market to hit its bottom.
- The average initial decline is –11.2% — but that’s not the end of the story.
- After the low, the market is:
- Higher one month later 87% of the time
- Higher three months later in 77% of cases
- Higher six months later 87% of the time
- Up a year later in 87% of cases — with an average gain of +24%
Notable examples include:
- 9/11 Attacks (2001): Market fell sharply, but recovered nearly +19% one year after the low
- GFC (2008): Steep declines — but by 2009, markets had bottomed and begun a historic bull run.
- COVID Crash (2020): A –34% drop in weeks… followed by one of the fastest recoveries on record.
Click table to see an enlarged version.
The data speaks for itself, and these patterns aren’t random. While every crisis feels different in the moment, the markets are forward-looking — they quickly price in bad news but begin recovering well before the headlines improve.
Recovery can happen faster than expected, and often, the best days on the market happen soon after the worst. This makes trying to time the market fraught with the danger of missing out on the upside. With discipline and perspective, investors can not only weather these storms—they can also emerge stronger on the other side.
Rob Gilmour is the Managing Principal of Wealth Simplicity. The information provided should not be considered personal financial advice as it is intended to provide general advice only. The content has been prepared without taking into account your personal objectives, financial situations or needs. You should seek personal financial advice before making any financial or investment decisions.