Seek Perspective Instead

Friday, sharp volatility struck and turned a slightly positive week negative, as the S&P 500 and MSCI World fell -2.6% and -2.2%, respectively.^[i] It was both indexes’ sharpest negative day in eight months—and pushed the S&P 500 to its first weekly decline since the end of March. Headlines and pundits were, predictably, on the hunt—what drove the drop? In our view, though, it really highlights the basic truth that volatility can strike anytime, anywhere, for any or no reason at all. Overthinking a single day’s swings risks leaping to premature conclusions.

To be clear, we understand that such sharp moves can be uncomfortable. Unsettling, even. And for some, the natural reaction is to seek a reason why it happened. Maybe, as headlines insisted, it was rate-hike fear. Maybe it was high Tech sector expectations seeing disappointment from some corporate results earlier this week, compounded by those rate-hike worries. Maybe it was lingering fear over the Strait of Hormuz or what have you. We don’t know. No one does. That is an inconvenient fact for those seeking why. But, tough as it may be to embrace, it is the truth. Short-term, or daily swings, defy easy explanation.

Instead of seeking explanations, seek perspective. To that end, see the below, which we hope helps do so.

Friday’s volatility is, again, the biggest daily drop since October 10. Without googling, do you recall what drove that drop? Our guess is that very, very few of you (if any) do. We didn’t, and we study markets for a living (literally). After revisiting our records, it is apparent it was a single-day wobble of -2.7% (S&P 500) and -2.3% (MSCI World) tied to fears President Donald Trump was going to slap much higher tariffs on China. You know that didn’t last. Exhibit 1 proves the point, showing the two indexes with October 10’s wobble circled.

Exhibit 1: A Choppy Day That Faded Into Memory

Source: FactSet and Yahoo Finance, as of 6/5/2026. MSCI World Index with net dividends and S&P 500 total return, 12/31/2024 – 6/5/2026.

Of course, there could be more negativity ahead. Perhaps even a correction (a short, sharp, sentiment-driven drop of -10% to -20%). But as we type this, markets sit less than -3% below all-time highs set on Tuesday. It would be vastly premature to see this as a surefire harbinger of big, bad things ahead. Wobbles like this happen. That we have seen few of them in the past two months may make this one feel extra sharp. But it isn’t.

Trying to exit markets and avoid volatility this close to an all-time high would be folly. You need to take more time—to view trends, assess what is pre-priced and what isn’t, and weigh the fundamental backdrop. That backdrop rarely, if ever, changes on a dime. This is why bear markets start with a whimper, not a bang. It would be weird for a bear market to declare its start with a sharp drop that gets loads of attention. The market is sneakier than that.

Instead of projecting what may or may not happen, consider a basic reality of markets: Assets that deliver high long-term returns, which certainly qualifies for stocks, carry volatility in the short run. It is the price tag for those long-term returns—an unavoidable fact of life. There are times where it has a clear explanation. Sometimes, like during last April’s steep, tariff-driven correction, volatility makes sense. Other times, it doesn’t.

If you have invested over the course of the last 18 months, you have seen one mini-correction tied to the Iran war’s outbreak and a much bigger correction in early 2025, tied to the Liberation Day tariff shock. During those stretches, fear ran white-hot. Yet the cumulative return since 2024’s end, even after today’s selloff, is 27.8% on the S&P 500 and 30.8% for global stocks.^[ii]

Those gains have rewarded investors for having patience and a steely will during the more difficult stretches. It is that perspective that a rocky Friday calls for—not a search for meaning in a volatile day.