By Saqib Iqbal Ahmed and Noel Randewich
Aug 18 (Reuters) – Well, that was fast!
The S&P 500’s record high on Tuesday confirmed that the 2020 coronavirus-driven bear market was by far the shortest.
Measured from the previous record high on the February 19 benchmark to its trough on March 23, the pandemic-induced bear mark lasted only 33 days, compared to the median age of 302 days of 20 bear marks that went to the 1920s, according to Yardeni Research data. By one commonly used definition, a new bubble market began in the S&P 500 when the index jumped from its 23rd March low, supported by trillions of dollars in incentives from US policymakers who improved hopes of a recovery from the deepest economic downturn since the Great Depression.
The dramatic bounce of Wall Street over the next five months saw the S&P win about 55% in the face of widespread economic destruction and a resurgence of the coronavirus pandemic in parts of the United States.
In June, the Nasdaq became the first of three major U.S. stock indices to regain huge heights, driven by gains in the shares of major technology-related companies that thrived on COVID-19 lockdowns, including Amazon.com Inc and Netflix Inc.
Generally defined as a drop of 20% or more from a peak, the S&P 500 has seen about a dozen bear marks, as near-bear marks since the late 1960s, in most cases accompanied by a recession.
While the 2020 bear market was the shortest lifespan of the S&P 500, it still picked up a punch. The index fell 34% from its full February to its low in March, just below the average loss of bear market of 37%.
However, participation in the index’s latest bear market was not as deep as its two previous declines. The 2009 bear market after the financial crisis devastated 57% of the S&P 500’s value, while the Wall Street invasion in 2002 after the imposition of the dot-com bubble almost eliminated half of its value.
(Report by Noel Randewich and Saqib Iqbal Ahmed; Edited by Ira Iosebashvili)
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