Introduction
The stock market has seen notable fluctuations recently, with the S&P 500 index down approximately 2.4% year-to-date as of March 6, 2025 (1). Concerns over recent job numbers, inflation reports, and new tariff announcements have fueled this volatility.
While such downturns can feel unsettling, long-term investors—especially those saving for retirement—should see these moments as opportunities, not setbacks.
Understanding the recent market decline
Several factors are driving the current market movements:
- Jobs report: Recent employment data showed stronger-than-expected job growth. While positive, this has sparked worries that the Federal Reserve might keep interest rates high to cool the economy, potentially slowing growth (2).
- Inflation data: Though inflation has eased from past peaks, persistent price increases in some sectors have raised speculation about prolonged higher rates, impacting businesses and consumers alike (3).
- Tariffs and trade policies: New tariffs on imports from Canada, Mexico, and China have stirred uncertainty in global trade. Companies fear rising costs and supply chain disruptions, which could dent earnings and economic stability (4).
Market volatility: A historical perspective
Market dips are normal. The S&P 500 has weathered plenty of declines, only to rebound over time.
- 2008 financial crisis: The index lost over half its value but recovered in the years that followed, rewarding patient investors.
- 2020 COVID-19 crash: A sharp drop occurred, yet the market hit new highs within months (5).
These examples reinforce a simple truth: sticking with a long-term strategy is often the best move.
The pitfalls of panic selling
Selling during a downturn often locks in losses and risks missing the recovery.
Timing the market is tough, even for pros. History shows that staying invested through rough patches pays off, as recoveries can come fast (6).
Investing doesn’t have to be complicated
A big myth about investing is that it demands constant attention or expert timing. The truth is, the simplest strategy—buying consistently and holding long term—often wins.
Tune out short-term noise, skip the panic, and stick to your plan for the best results (7).
Viewing market declines as opportunities
For long-term investors, dips are chances to buy quality assets at lower prices.
A great approach? Dollar-cost averaging—investing regularly regardless of market conditions. This method lets you snag more shares when prices drop, boosting returns when the rebound hits.
The resilience of markets
No one can predict every market twist, but history highlights a clear trend: markets bounce back.
Economic data will shift, policies will change, and volatility will linger—but over decades, growth prevails (8).
Final thoughts
Downturns tied to jobs, inflation, or trade can stir concern, but long-term investors shouldn’t panic.
Stay disciplined, keep learning, and focus on your big-picture goals.
The best part? Investing doesn’t have to be complex—just buy, hold, and let time work its magic.