With the stock market officially in a bear market, here’s a look back at each decline of at least 20% since the 1930s to see how long, and how severe, such downturns typically are.
Here’s a chart of the S&P 500’s returns in bull and bear markets:
(click on image to enlarge it)
Bull markets tend to last far longer and generate moves of far greater magnitude than bear markets. Time after time, bear markets have proven to be good buying opportunities for long-term investors. The problem is that it sometimes takes many years for that opportunity to pay off.
The Dow Jones Industrial Average and the S&P 500 on Thursday suffered their worst one-day declines in more than 30 years as investor sentiment over the coronavirus pandemic deteriorated from uncertainty to panic. The S&P 500 is the main U.S. stock benchmark and what is used to determine these market cycles on Wall Street officially.
The speed of this decline has been one for the history books.
Some believe that the coronavirus, and efforts to contain its spread, could tip the global economy into a recession in the first half of 2020. Investors are not waiting around to see how bad the economy gets, bailing on stocks.
Friday’s pop eased some of the pain, but the bear market won’t officially be over until the S&P 500 can climb back above its previous record high set in February.
History shows that could take some time.
— CNBC’s John Schoen and Nate Rattner contributed reporting.
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