Bear Market To New Record High

S&P 500 hits new record high after shortest bear market ever.

sumit
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Senior ETF Analyst
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Reviewed by: Sumit Roy
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Edited by: Sumit Roy

U.S. stocks were in record territory on Wednesday, one day after the S&P 500 closed at an all-time high for the first time since February.

On Tuesday, the index closed at 3,389.78, surpassing the Feb. 19 high of 3,386.15. Tuesday’s intraday high of 3,395.06 was also a new record, surpassing Feb. 19’s 3,393.52 peak. On Wednesday, the index was higher still, with the index briefly reaching 3,399.54 on an intraday basis, before closing down modestly on the day. 

ETFs that track the S&P 500, like the SPDR S&P 500 ETF Trust (SPY), are up around 5.9% year to date (including dividends), and up a whopping 51.9% from the March 23 low.

S&P 500

Fastest Recovery Ever

The 126 days it took for the S&P 500 to recover to its prior peak is the fastest rebound ever from a bear market. The move mirrors the index’s initial descent into bear market territory—considered a drop of at least 20% from the highs—which took a mere 16 sessions, the most rapid drop of that magnitude on record.

The S&P 500 reached bottom 23 days after peaking, making the COVID-19 bear market decline also the shortest on record.

Unprecedented relief measures from monetary and fiscal authorities in the U.S. have supported stocks, offsetting what may end up being a brief, but severe, recession. A relentless rally in large technology stocks in particular, and growth stocks in general, has also benefited large cap indices like the S&P 500.

Smaller stocks haven’t fared as well, though they too are well off their lows. The iShares Russell 2000 ETF (IWM), which tracks small cap U.S. stocks, is still down 7.7% from its all-time highs.

Bull Market Beginning?

Some investors consider the point at which the S&P 500 reaches a new high after a bear market the start of a new bull market.

Others consider the lows of the bear market (which can only be seen in hindsight) as the starting point of any bull market. If that’s the case, then this bull market has been chugging along on for nearly five months.

In either case, these labels do not guarantee anything about the future trajectory of stocks. For example, in May 2007, the S&P 500 topped 1,530, hitting a new high for the first time since the dot-com bubble peak of seven years earlier.

Rather than mark the start of big bull market, the S&P 500 was cut in half over the next year and a half due to the global financial crisis. History is littered with examples like these.

That is not to understate how impressive this year’s comeback in U.S. stocks has been. The rebound has been monumental, and could very well mark the start of a bigger uptrend. But investors will only know for certain in hindsight.

Email Sumit Roy at [email protected] or follow him on Twitter @sumitroy2

 

 

Sumit Roy is the senior ETF analyst for etf.com, where he has worked for 13 years. He creates a variety of content for the platform, including news articles, analysis pieces, videos and podcasts.

Before joining etf.com, Sumit was the managing editor and commodities analyst for Hard Assets Investor. In those roles, he was responsible for most of the operations of HAI, a website dedicated to education about commodities investing.

Though he still closely follows the commodities beat, Sumit covers a much broader assortment of topics for etf.com, with a particular focus on stock and bond exchange-traded funds.

He is the host of etf.com’s Talk ETFs, a popular video series that features weekly interviews with thought leaders in the ETF industry. Sumit is also co-host of Exchange Traded Fridays, etf.com’s weekly podcast series.

He lives in the San Francisco Bay Area, where he enjoys climbing the city’s steep hills, playing chess and snowboarding in Lake Tahoe.