The S&P 500 fell 1.2% on Monday, followed by a 1.5% rebound in the next session, and Wednesday's brutal sell-off saw the benchmark losing 2.9%.
Going back to 1928, the benchmark has lost 2.5% on average in the six months after the strange pattern occurred, according to Bespoke. The S&P 500 fell 1.2% on Monday, followed by a 1.5% rebound in the next session, and Wednesday's brutal sell-off saw the benchmark losing 2.9% amid the recession signal from the bond market. This consecutive whiplash for the S&P 500 — down 1%, up 1% and down 2% — is a rare occurrence in market history and going back to 1928, the index has lost 2.5% on average in the six months after the phenomenon occurred, according to Bespoke Investment Group.
That's how recessions happen. Panic selling.