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Bear markets have a long history with the S&P 500, Nasdaq Composite and Dow Jones industrial indices and have returned as a result of the economic turmoil caused by inflation, high interest rates, high gasoline prices and the fallout from the Russian invasion of Ukraine.
Some bear markets have occurred during recessions with low GDP and high unemployment, but this is not the case with current bear markets, at least not yet.
The S&P 500 joined the Nasdaq Composite Index in a bear market on June 13, after posting a 21% drop since hitting a high of 4,796 on January 3, 2022. The previous S&P bear market was the shortest of the year. About a month from February 19, 2020 to March 23, 2020 when the index fell 34%, CBS reported.
The Nasdaq actually entered the bear market three months ago on March 7 when it fell 20.1% from its high of 16,057 on November 19, 2021. The tech-laden index fell on June 13 to 32% below its high of 16,057 in November. 19, 2021.
The Dow Jones Industrial Average is down about 17% from its all-time high of 36,799 on January 4, 2022.
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Bear markets can be short or long term
A bear market is defined as when an index falls 20% from its recent high. The shortest bear market ever since 1928 is the S&P 500 Index from February 19, 2020 to March 23, 2020, a 33-day period caused by the Covid pandemic, According to search for alpha. Prior to that bear market that lasted about one month, the S&P 500 recorded a 62-day bear market during the financial crisis from January 6, 2009 to March 9, 2009 when the index fell more than 27%.
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The S&P index had a much longer bear market during the financial crisis from October 9, 2007 to November 20, 2008, or 408 days, when the index fell nearly 52%. The S&P’s longest bear market spanned from January 11, 1973 to October 3, 1974, and was 630 days, or 21 months, when the index fell more than 48%.
Not surprisingly, the S&P 10 had bear markets during the Great Depression of the 1930s.
The average length of an S&P 500 bear market, based on research on alpha numbers, is 268.3 days, or about 21 months.
The Nasdaq has had some notable bear markets since the index was launched in 1971, according to motley ful. The worst bear market occurred during the bursting of the dotcom bubble from the early 2000s when the index fell 75% by mid-October 2002. The bear market continued through the 2008 financial crisis and did not end until November 2013.
The index had another devastating bear market in 1973, when the Nasdaq fell nearly 60% and hadn’t come out of the bear market for nearly four years. The index had other bear markets, including one in October 1987 as a result of the stock market crash, in July 1990 and early 1982, both of which coincided with recessions.
The Dow Jones Industrial Average on March 11, 2020, entered a bear market for For the first time in 11 years. The index fell 38 percent from its high of 29568 on February 12, 2020, to March 23, 2020, before recovering, Investopedia reported.
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