Say Goodbye to the Shortest Bear Market in S&P 500 History

by Saqib Iqbal Ahmed, Noel Randewich

 

The S&P 500's .SPX record closing high on Tuesday confirmed that the coronavirus-fueled bear market of 2020 was by far the shortest ever.

Measured from the benchmark’s previous record high on Feb. 19 to its trough on March 23, the pandemic-induced bear market lasted a mere 33 days, compared to the median age of 302 days of 20 bear markets going back to the 1920s, according to Yardeni Research data.

 

By one commonly used definition, a new bull market in the S&P 500 began when the index bounced from its March 23 low, supported by trillions of dollars in stimulus from U.S. policymakers that boosted hopes of a recovery from the deepest economic downturn since the Great Depression.

Wall Street’s dramatic bounce over the next five months saw the S&P gain some about 55% in the face of widespread economic devastation and a resurgence of the coronavirus pandemic in parts of the United States.

In June, the Nasdaq became the first of the three major U.S. stock indexes to reclaim all-time highs, powered by gains in the shares of big technology-related companies that prospered during COVID-19 lockdowns, including Amazon.com Inc (AMZN.O) and Netflix Inc (NFLX.O).

Commonly defined as a drop of 20% or more from a peak, the S&P 500 has seen about a dozen bear markets, or near-bear markets since the late 1960s, in most cases accompanied by a recession.

While 2020’s bear market was the S&P 500’s shortest-lived, it still packed a punch. The index fell 34% from its February high to its March low, just slightly below its average bear market loss of 37%.

 

However, declines in the index’s most recent bear market were not as deep as its two previous downturns. The 2009 bear market following the financial crisis destroyed 57% of the S&P 500’s value, while the Wall Street slump in 2002 following the implosion of the dot-com bubble eliminated almost half of its value.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

 

Reporting by Noel Randewich and Saqib Iqbal Ahmed; Editing by Ira Iosebashvili

Ahmed, S.I., & Randewich, N. (2020). Say Goodbye to the Shortest Bear Market in S&P 500 History. Retrieved from https://www.reuters.com/article/us-usa-stocks-s-p500-bear-graphic-idUSKCN25E2R9.