The story of the stock market this year has been remarkable, if not a little unnerving. Markets plunged in March, but they soon shrugged off the global pandemic, the record-breaking job losses and political uncertainty — mostly thanks to central banks around the world pumping trillions of dollars of stimulus into the system.
We went back through the last 10 bear markets, defined as when the S&P 500 Index falls more than 20% from its previous high, to see how the 2020 bounce compared with history.
The chart below rebases the last 10 bear markets, going all the way back to 1957, such that everything revolves around the market bottom, which we’ve labelled day 0. It reveals two things about the 2020 bear market – that it was simultaneously the sharpest decline and the sharpest bounce back of any of the last 10 bear markets. Less than 2 months from their lowest point US stocks were back to where they were at the start of 2020 — and they haven’t looked back since.