What if a Bear Market in Stocks Is Enough to Cause an Economic Slowdown on Its Own?

Tuesday drop for Dow and S&P biggest since Oct. 10 from CNBC.

via CNBC:

  • A bear market — an index decline of 20 percent or more from recent highs — would alter consumer behavior, argues Bleakley’s Peter Boockvar.
  • The last S&P 500 bear market happened during the financial crisis when the index lost 56 percent of its value.

A bear market in the S&P 500 — a decline of 20 percent or more from recent highs — would be a catalyst for an economic slowdown, according to Peter Boockvar, chief investment officer at Bleakley Advisory Group.

That kind of drop would alter consumer behavior, Boockvar told CNBC on Wednesday.

“You’ll see consumers that are reining things in,” he added. “You’ll have CEOs and CFOs that say, ‘You know what, market is down 20 percent, and I have limited visibility now.'”

The last S&P 500 bear market happened during the financial crisis when the index lost 56 percent of its value from the then-record high close of 1,565 on Oct. 9, 2007 to the closing low of 676 on March 9, 2009.

That means the current bull market — the longest since World War II — has been rolling ever since then.

 

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