Geopolitical conflicts have had little long-term market impact
What this chart shows:
The chart on the left shows the average S&P 500 drawdown after geopolitical conflicts since 1980, along with the average one- and three-year returns from the lows. The chart on the right shows each event alongside its maximum drawdown, and subsequent one- and three-year returns from the bottom.
Why it matters:
History shows that markets tend to react quickly to geopolitical shocks. Over time though, it's the strength of the underlying economy, not the headlines, that ultimately determines the direction of markets.
Short-term sell-offs during major conflicts are expected, but markets have bounced back every time. Since 1980, stocks were positive one year after the associated low in 8 of 10 cases and delivered gains three years later in every instance.
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Source: Morningstar. S&P 500 Price Return Index. Max drawdown = market peak over prior 30 calendar days prior to event to market trough over the following 90 calendar days. 1-year and 3-year returns = S&P 500 index 1 and 3 years after the trough date. Averages exclude the 2026 U.S./Israel–Iran conflict. Analysis represents major geopolitical conflict events since 1980; may not be exhaustive. Past performance does not predict or guarantee future performance. You cannot invest directly in an index.