Geopolitical and Military Events: How Have U.S. Markets Responded?

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February 24, 2022

While events are still unfolding, Russia has taken swift action to achieve at least two goals in its confrontation with Ukraine. First, it has formally recognized two Eastern Ukraine “statelets” as independent countries. Second, Russia has moved troops to occupy both territories. Western nations, including the U.S., are now coordinating non-military responses to this incursion, primarily in the form of economic sanctions.1

World markets have responded as well, with the price of oil, gold, and other basic commodities rising quickly in the aftermath of Russia’s actions. World equity markets are showing increased volatility too. However, looking beyond just the next few days or weeks of potential market responses reveals their historical resiliency in the aftermath of many prior geopolitical and military events. More specifically, as shown in the table below, the 1-, 3-, 6-, and 12-month total returns of the S&P 500 Index continued to rise, on average, with the passage of time after such an event occurred.

The table details 12 prior events, ranging from the attack on Pearl Harbor in 1941 to the beginning of the Iraq War in 2003. Looking at the 1-month returns, 50% were positive, and they averaged 1.3% overall. With the 6-month returns, 67% were positive, and they averaged 5.5% overall. After 12 months, 75% of the S&P 500 returns were positive, and they averaged 8.6% in total—only slightly below the 10.5% long-term average return for this index. Only three events—each shadowed in gray—showed a negative return after 12 months, and each of these occurred during a major recession.

The early evidence suggests that a potential recession is not envisioned at this time by many analysts and policy makers. For example, the U.K.’s National Institute for Economic and Social Research has revised its 2022 World Gross Domestic Product (GDP) forecast downward to 3.3% as a result of the Ukrainian crisis and has lowered its European Union GDP forecast to 2.1%. The Conference Board’s U.S. GDP growth rate in 2022 would decline to 2.5% as well. None of these forecasts suggest a negative GDP growth environment, i.e., a recession, is looming currently.

While markets may remain volatile in the short term, The Mather Group, LLC (TMG) employs a suite of risk management tools to help withstand such potential volatility. These include constructing diversified investment portfolios, favoring high-quality securities, and applying accelerated tax strategies to help increase future after-tax income.

Regardless of market volatility, your financial plan plays a critical role in helping you maintain progress toward achieving your financial goals. Your trusted TMG advisor is ready to respond to any questions or concerns you might have, and to help assure that your financial plan remains both timely and actionable. Please reach out to your advisor for guidance at any time.


1 Reuters

Data Sources: Bloomberg; The Conference Board; FACTSET; Goldman Sachs; New York Times; Reuters; S&P Global; Truist IAG; U.K.’s National Institute for Economic and Social Research; Wall Street Journal

The Mather Group, LLC (TMG) is registered under the Investment Advisers Act of 1940 as a Registered Investment Adviser with the Securities and Exchange Commission (SEC). Registration as an investment adviser does not imply a certain level of skill or training. For a detailed discussion of TMG and its investment advisory services and fees, see the firm's Form ADV on file with the SEC at The opinions expressed, and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security. The opinions and advice expressed in this communication are based on TMG's research and professional experience and are expressed as of the publishing date of this communication. All return figures and charts shown are for illustrative purposes only. TMG makes no warranty or representation, express or implied, nor does TMG accept any liability, with respect to the information and data set forth herein. TMG specifically disclaims any duty to update any of the information and data contained in this communication. The information and data in this communication does not constitute legal, tax, accounting, investment, or other professional advice. Investing in securities involves risks, and there is always the potential of losing money when you invest in securities. Before investing, consider your investment objectives. Past performance does not guarantee future results.

Index performance results do not represent any managed portfolio returns. An investor cannot invest directly in a presented index, as an investment vehicle replicating an index would be required. An index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the performance shown. Please feel free to contact us for additional information on any indices mentioned in this commentary. 


  • Standard & Poor's (S&P) 500: A stock market index that measures the stock performance of 500 large companies listed on stock exchanges in the United States.


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