S&P 500 & Nasdaq Analysis and Trends

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Here’s what to expect from your stocks after huge one-day market rallies
By: Mark Hulbert | April 11, 2025

🔸 Record-setting gains like U.S. markets enjoyed on April 9 typically occur during bear markets

The U.S. stock market’s massive rally on April 9 — with all three major U.S. benchmarks posting eye-popping gains — seemed to be telling anxious investors that they could finally relax.

Not so fast. Market history suggests that after huge one-day rallies, stocks more often than not have been a losing bet.

Consider the Nasdaq Composite’s COMP +2.06% surge on April 9, when it rose a stunning 12.2%. Since this index was created in 1971, there has been only one other session with a gain at least that large — Jan. 3, 2001 — and the index then turned south, losing more than 30% over the next three months.

That’s just one data point, of course. But anyone who looks at the historical record would conclude that an explosive one-day rally isn’t a reason to be wildly bullish.



The same conclusion emerges if we look at those trading sessions in which the Nasdaq Composite closed at least 9.5% higher (which is how much the S&P 500 SPX+1.81% rose on April 9). This expanded subset now includes five days, and all five occurred during major bear markets (per the calendar maintained by Ned Davis Research). The chart above shows the Nasdaq’s average returns following those five trading sessions — and it isn’t pretty.

The S&P 500 follows a similar pattern. Since the index was created in March 1957, there have been just two other sessions in which it gained at least as much as it did on April 9. Following these two sessions, the benchmark over the subsequent one-, two-, and three-month periods produced average losses of 8.0%, 10.2% and 11.6%, respectively.

Why bear markets can produce huge one-day gains

There are sound theoretical reasons why big one-day rallies typically occur during bear markets: In order to entice investors to endure periods of extraordinary volatility, the market’s expected return must rise. And for that to be the case, the market must first decline. This is why the Cboe’s Volatility Index (or VIX) VIX-7.76% is so much higher during bear markets.

Bull markets have an entirely different feel to them, as newsletter editor Jon Markman once put it when contrasting bull-market psychology from bear-market volatility: “During bull markets stocks tend to rise at a leisurely and thoughtful pace, like an 80-year-old couple out for a walk in the Florida sunshine.” (Disclosure note: Markman is not one of the editors who pay a flat fee to my performance-auditing firm to track his newsletters’ returns.)

I can’t think of anything more opposite of a leisurely walk in the Florida sunshine than the astonishing roller coaster ride the market is taking us on now.

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