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Kensho Stats

S&P 500 drops 2%. Here’s what should happen next

Traders on the floor of the New York Stock Exchange
Brendan McDermid | Reuters
Traders on the floor of the New York Stock Exchange

U.S. stocks plunged Friday on concerns the Fed could raise interest rates as soon as this month. So what will happen Monday?

Based on a study from Kensho, a quantitative tool that takes into account historical trading patterns, there have been 21 instances since 2010 when the S&P 500 fell by at least 2 percent in a single day. Here's what happened during the next trading day ...



During those instances, the best route for investors was to buy utilities stocks, which posted an average gain of 0.23 percent the day after a sell-off, up 71 percent of the time, according to Kensho.

Another defensive sector to own was consumer staples, which posted an average return of 0.11 percent, up nearly 62 percent of the time.

Telecom stocks also managed to post higher-than-average returns, with a gain of 0.39 percent, up 57 percent of the time.

If history is any guide, it has paid off to stay defensive after a market sell-off similar to the one Friday, as the chance for the S&P 500 to bounce back in the next trading session was only 50 percent, data from Kensho shows.

Disclosure: NBCUniversal, parent of CNBC, is a minority investor in Kensho.