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Stocks are wobbling amid a U.S. war with Iran, and investors may feel anxious.
But volatility is a common feature of the stock market. Indeed, drops of 1%, 2% or more in a given day — though they may feel nauseating at the time — happen more often than you may think.
The S&P 500 U.S. stock index, for example, has fallen 1% or more on 1,001 days over the past 30 years — or, about 33 days per year, on average, according to a Morningstar Direct analysis of market data since 1996.
Over the same period, the index slipped at least 2% on 313 days, according to Morningstar. That’s an average of about 10 days per year.
“That’s almost once a month,” Charlie Fitzgerald III, a certified financial planner based in Orlando, said of the data.
“These little blips happen quite often,” said Fitzgerald, who is a founding member of Moisand Fitzgerald Tamayo, which ranked No. 69 on CNBC’s 2025 Financial Advisor 100.
“It’s what stock markets do, and it’s what they’ve done for 100 years,” he said.
Investors saw such a drop earlier this week as they digested the prospect of a broadening conflict in the Middle East, and what it could mean for oil prices and the broader U.S. and global economies. For example, the S&P 500 closed 1% lower on Tuesday, and at one point in the day, it was down around 2%.
“This is kind of a classic geopolitical shock,” Fitzgerald said.
The financial markets tend to take a “shoot first and ask questions later” mentality when extrapolating from headlines about such conflicts, Scott Wren, senior global market strategist at Wells Fargo Investment Institute, said Wednesday in a market commentary.
“We believe investors need to try and keep a clear head, look through the headlines, and stick to a well thought out plan,” Wren wrote. “A diversified portfolio is one key to that plan.”
Single days matter less than long-term trend
On a single day at the start of the Covid pandemic — on March 16, 2020 — the S&P 500 sank about 12%. Stocks declined roughly 34% between Feb. 19, 2020, and the market bottom on March 23. However, stocks rebounded with vigor and were back to their old highs by August — the fastest recovery of its kind in history.
More recently, after President Donald Trump announced so-called “liberation day” tariffs, the S&P 500 index fell nearly 5% on April 3, 2025 — its worst day since June 2020. The market shed about 12% between April 2 and 8, but had fully recovered by early May, just a month later.
Since 1996, there have been 21 days in which the S&P 500 plunged 5% or more, Morningstar found — amounting to a daily decrease of that size every year and a half or so, on average.
Despite the frequency of steep drops for stocks, the S&P 500 has risen 0.03% a day on average over the last 30 years, resulting in a typical annual return of more than 10%, according to Morningstar.
As a result, a $10,000 investment in the S&P 500 at the start of 1996 would be worth around $192,000, as of Wednesday, Morningstar found.
“Short-term shocks are difficult to predict and frequently followed by recoveries,” said Amy Arnott, a portfolio strategist at Morningstar.
“Investors are better served by focusing on a sound, long-term asset allocation and staying disciplined rather than getting distracted by external events,” Arnott said.
Big drops can be a good time to rebalance
When the market sustains a relatively big decline over a short period, of perhaps 5% to 10% or even more, investors may be able to take advantage by rebalancing, Fitzgerald said.
For example, if your target ratio of stocks to bonds is 65% stocks and 35% bonds, that ratio may fall to 50% stocks and 50% bonds if stocks decline precipitously in value, he said. Investors can sell some bonds and use the proceeds to buy stocks and to get back to their target ratio, Fitzgerald said.
That behavior forces investors to buy stocks when prices are lower, he said. Then, they can rebalance the other way when stocks recover, he said.
