Wednesday, April 9, delivered a historic rally in the U.S. stock market.
The S&P 500 surged 9.52% in a single day, marking the third-largest daily gain since World War II, following gains of 11.58% and 10.79% on Oct 13 and Oct 28, 2008, respectively.
Meanwhile, the Nasdaq Composite jumped 12.61%, registering its second-largest one-day gain in history, trailing only the 14.17% surge on Jan 3, 2001.
But what happens after such extreme rallies?
<One-Month Return After a 6%+ One-Day Gain: Historical Trends>
An analysis of past instances where the S&P 500 rose more than 6% in a day shows:
Average return over the next month: +2.8%
Probability of positive return: 67%
The Dow Jones Industrial Average showed similar results:
Average return: +2.8%
Probability of gain: 70%
However, the more volatile Nasdaq Composite lagged:
Average return: +0.9%
Probability of gain: 54%
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