BIG NUMBER | 54: A Rapid Recovery

After plummeting nearly 19% on tariff fears, the S&P 500 staged a truly historic rally in the second quarter, soaring 23% in just 54 trading days.

That represents the index’s fastest-ever recovery following a decline of 15% or more, going back to 1957 (see the chart). The only other moments that came close are the recoveries following the collapse of the hedge fund Long-Term Capital Management in 1998 (58 days) and the 1980 recession (57 days).

Both the recent drawdown and the record-breaking upswing that followed share a common, man-made denominator: President Trump’s decision to impose significant and widespread tariffs on other nations, and his string of decisions thereafter to delay or (in some cases) back down entirely from those tariffs. With each policy retreat, investors became increasingly confident that Trump’s threats were merely negotiating tactics and unlikely to be implemented.

We believe this rapid recovery in stocks serves as a good reminder that an effective risk mitigation strategy should be highly responsive and able to re-engage with markets quickly as they move higher.

By Mike Dickson, Ph.D.

Originally published July 1, 2025

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