Standard & Poor's stripped the U.S. of its AAA credit rating after the debt-ceiling standoff. The S&P 500 fell 17% in 11 days. Paradoxically, Treasury prices ROSE (yields fell) as investors fled TO the downgraded asset.
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ALAN INTELLIGENCE · alanglobalintelligence.com
ALAN IntelligenceData as of 2026-08-30
Bars: median S&P 500 forward return. Whiskers: 25th-75th percentile. n = 1 occurrences.
Based on 1 historical occurrences. Last triggered: 2011-08-05.
Past performance is not indicative of future results. This material is for informational and educational purposes only and does not constitute investment advice, an offer to buy or sell any security, or a recommendation. Data from publicly available sources believed to be reliable but not guaranteed. All investments involve risk, including possible loss of principal.
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ALAN GLOBAL INTELLIGENCE · alanglobalintelligence.comSource: S&P 500 daily closes · Generated 2026-08-30
Historical occurrencesshowing 1 of 1
Date
1M return
1Y return
5Y return
2011-08-05
-2.9%
+16.3%
+81.9%
What history says
Editorial commentary written by ALAN analysts. Figures cited below are analyst-authored context — they are not derived from the chart above and may reflect different windows or sources.
The market reaction was irrational and short-lived
A credit downgrade of the world's reserve currency issuer caused a panic that fully reversed within 5 months. By February 2012, the S&P 500 had exceeded its pre-downgrade high.
Treasuries rallied on the downgrade — the ultimate irony
Investors fleeing risk bought the very asset that was downgraded. This demonstrated that US Treasuries' 'risk-free' status comes from liquidity and reserve-currency status, not credit ratings.
The advisory value was enormous
Advisors who held clients through this episode delivered materially better outcomes than those who capitulated. The 12-month return from the August low was +25%.
For your portfolio
Headline downgrades of the very assets that anchor a portfolio are a test of process, not a signal: before reacting, check what actually repriced — in 2011 Treasuries rallied on their own downgrade — and let a scheduled review, not the news cycle, decide any changes.
For information and research only. Not investment advice. ALAN does not place trades or execute orders. Figures come from the sources shown and can lag the market; verify independently before making decisions. Past performance is not predictive of future results.
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ALAN is not a broker-dealer or investment advisor. All data is informational only and does not constitute investment advice. Past performance does not guarantee future results.