S&P 500 Records Its First ‘Death Cross’ in Three Years: Implications for Investors

The S&P 500 index recently marked a significant milestone, achieving its first ‘death cross’ in three years. Observed on April 15, 2025, this drastic technical indicator surfaced despite an overall upward trend in U.S. stocks following a rebound the previous week. This article delves into what a death cross signifies and what investors can expect next for the market landscape.

Understanding the ‘Death Cross’

A ‘death cross’ occurs when a shorter-term moving average, specifically the 50-day moving average, dips below a longer-term moving average, the 200-day moving average. This event is widely recognized among technical analysts as a potential sign of a looming market correction or even a more profound downtrend.

According to Dow Jones Market Data, the last death cross for the S&P 500 happened in March 2022. During this time, the index’s performance has echoed the turbulent journey of U.S. stocks, which have faced increased volatility throughout 2025. Notably, the small-cap Russell 2000 and innovative giant Tesla Inc. (TSLA) have also displayed similar patterns indicating market caution.

Historical Context and Predictions

Investors might feel unnerved by the appearance of a death cross; however, historical data offers a more nuanced view of its implications. Analysis shows that while past S&P 500 death crosses have often preceded short-term declines, the pain is generally brief. In fact, the index has, on average, rebounded after three months, six months, and even 12 months from previous death crosses.

Paul Ciana, the chief technical strategist at Bank of America Securities, highlighted that the signals from past death crosses have been somewhat ambiguous. A crucial factor to consider will be whether the 200-day moving average has declined over the past five trading days following the death cross, which could indicate further lower movement for the S&P 500.

Contrasting Market Views

Market analysts have diverging opinions on what this recent death cross might entail for the future. On one side, Craig Johnson, chief market technician at Piper Sandler, presents a more favorable outlook. He points out that death crosses often serve as lagging indicators, not necessarily foreshadowing additional losses. In many cases, they have historically signaled the potential for a “snapback” rally where investors return to the market in search of enticing buying opportunities.

Data from Dow Jones shows that recent death crosses have produced mixed outcomes for the S&P 500. The index’s performance a year after the death cross that occurred on March 14, 2022, was underwhelming, ending in a decline. In contrast, following a death cross on March 30, 2020, the index experienced a remarkable upswing of 50% over the same timeframe.

Current Market Trends

Even with the recent apprehensions stemming from the death cross, the S&P 500 managed to achieve a 0.8% increase as trading concluded on April 15, 2025. However, it’s important to note that while the index saw gains, it finished below its daily highs. Other major indexes, such as the Nasdaq Composite and the Dow Jones Industrial Average, also concluded the trading day positively.

Final Thoughts for Investors

The S&P 500’s first death cross in three years brings with it a range of interpretations and reactions from market analysts. While the technical indicator raises concerns over potential declining trends, historical data suggests that investors should remain cautious yet optimistic, as rebounds have typically followed such occurrences. It remains crucial for investors to monitor trends closely, particularly the movements of the 200-day moving average, to assess the best course of action moving forward.

As always, whether to invest or hold should depend on individual risk tolerance, investment strategies, and a comprehensive analysis of the ever-changing market dynamics. Investors are encouraged to stay informed, conduct thorough research, and consider both short-term and long-term trends as they navigate this challenging landscape.