The decline in U.S. stocks under the impact of the current geopolitical conflict has exceeded the median level of similar historical events, and multiple indicators show that selling pressure has not yet been fully released.
On Monday (March 30), U.S. stocks briefly rebounded in early trading as Trump commented on the progress of negotiations, but the gains failed to hold—the S&amp;P 500 eventually closed down 0.4% at 6,343.72 points, the Nasdaq Composite fell 0.7% to 20,794.64 points, and the Dow Jones Industrial Average rose slightly by 49.50 points, or 0.1%, to 45,216.14 points.
Since the close on February 27, the S&amp;P 500 has fallen a cumulative 7.4%, a decline that has exceeded the 6.1% median maximum drawdown for historical geopolitical conflict events compiled by Deutsche Bank.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/5c02da98-9903-4a41-b173-84dc31577356.jpeg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="Image" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/5c02da98-9903-4a41-b173-84dc31577356.jpeg"/>
Analysis by Deutsche Bank's strategist team shows that discretionary investors are significantly underweight stocks but still have room to further reduce positions; the equity exposure of systematic strategy funds has fallen below neutral levels. If the market fails to rebound in time or volatility continues to climb, position reductions by these funds could continue to pressure the market.
Notably, the Cboe Volatility Index (VIX) closed above 30 on Monday, a level that usually means the market is on high alert.
<h2>Historical Script Fails, This Time the Decline Is Deeper</h2>
About a month before the outbreak of the Iran conflict, many professional investors bet that the impact would be short-lived, based exactly on historical precedents—stock market corrections triggered by geopolitical shocks often recover within days or even weeks.
A data table previously compiled by Deutsche Bank's strategist team once served as the market's &#34;operating manual.&#34; The table shows that historically, the S&amp;P 500 has bottomed out an average of 16 trading days after a geopolitical shock, with an average recovery period of 109 days—though this figure was significantly inflated by the 1973 Arab oil embargo, when the S&amp;P 500 took more than five and a half years to recover lost ground.
However, the current market trend has rendered the aforementioned historical patterns invalid. Israel and the United States launched attacks on February 28, and investors were not able to trade on the developments until the market opened on March 2. As of Monday, 20 trading days have passed since the conflict broke out, and the S&amp;P 500's decline has not only failed to stop within the historical average bottoming window but has already exceeded the historical median drawdown level.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/53acce8d-4f5d-4ee4-aef6-1ddc44bf09c2.jpeg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="Image" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/53acce8d-4f5d-4ee4-aef6-1ddc44bf09c2.jpeg"/>
Deutsche Bank's strategist team pointed out based on internal data that discretionary investors are currently significantly underweight stocks, but there is still room for further compression of their holdings. The equity exposure of systematic strategy funds—including trend-following funds such as Commodity Trading Advisors (CTAs)—has fallen below neutral levels for the first time since July 2024.
The team warned that if the market fails to see a timely rebound or if volatility rises further, such funds may still continue to cut positions, posing additional mechanical selling pressure on the market.
The VIX closed above 30 on Monday, a level that historically corresponds to high market anxiety, indicating that current investor concerns about the future remain at a high level.

According to statistics, the S&P 500 has fallen a cumulative 7.4% since the close on February 27, exceeding the median level of maximum drawdown for similar historical events and breaking the historical pattern of short-term bottoming. Deutsche Bank analysis indicates that discretionary and systematic funds still have room to further reduce positions. Combined with the Cboe Volatility Index (VIX) standing above 30, market selling pressure has not been fully released, and the decline in U.S. stocks is far from bottoming out

- U.S. stocks are experiencing a decline exceeding historical averages due to recent geopolitical conflicts, with indicators suggesting ongoing selling pressure.  
- On March 30, the S&P 500 fell 0.4% to 6,343.72 points, while the Nasdaq Composite dropped 0.7% to 20,794.64 points.  
- Deutsche Bank strategists note that discretionary investors are underweight in stocks, and sustained market volatility may lead to further sell-offs, contributing to heightened investor anxiety, as indicated by a VIX closing above 30.

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-7.4%! U.S. Stocks Falling More Sharply Than During Previous Geopolitical Conflicts, Deutsche Bank: Far From Bottoming Out