S&P 500 Down 3% Amid Iran War, History Says Hold
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- S&P 500 is down 3.1% over the past month and 3.8% from its January high, after a brief bump from Trump's State of the Union address where he did not announce a strike on Iran.
- Gas prices have surged 17% since the war in Iran began, one of the few bright spots in the inflationary picture.
- Crude oil prices have risen above $100 per barrel for the first time since 2022 and may increase further as the war disrupts Middle East oil exports.
- New York Fed economic model in February projected an 18.7% chance of a recession by January 2027, before the war in Iran started.
- Motley Fool research shows that during every recession since 1980, the S&P 500 has eventually recovered, often before the recession ends, and historically reaches higher levels after the downturn.
- S&P 500 fell 33.9% from its pre‑recession high during the COVID‑19 recession (Feb‑Apr 2020) but recovered to within 10% of that high by the end of April and fully by July.
- S&P 500 index fund investors who held $100 on Dec 31 1979 would have seen it grow to over $4,000 on a total‑return basis after weathering six recessions.
Why it matters: Investors who hold their positions avoid missing the typical post‑crisis rebound, while panic sellers risk locking in losses; the S&P 500 has historically recovered from geopolitical shocks and often surpasses its pre‑crisis peak, meaning long‑term holders stand to gain as markets stabilize.
