The S&P 500 is now in an official bear market, according to S&P Dow Jones Indices

14 Jun 2022

CNBC

The SP 500 is now in an official bear market according to SP Dow Jones Indices

Since the modern S&P 500 index began in the late 1920s, the average bear market has translated into a 38% price decline lasting an average of almost 19 months.

Traders on the floor of the NYSE, June 13, 2022.

Source: NYSE

It's official, according to the folks who decide which markets are bulls and which are bears, not to mention which stocks go into the Dow Jones Industrial Average and the S&P 500.

U.S. stocks on Monday entered a bear market because the S&P 500 closed more than 21% below its all-time record close reached as recently as last January, S&P Global Dow Jones Indices senior index analyst Howard Silverblatt wrote.

Stocks had been flirting with a bear market for the past several weeks on an intraday basis, but had never actually closed below 3837, the level S&P Global needed to see in order to officially declare one.

S&P Global says a 20% decline in the S&P 500 on a closing basis from its previous peak is all it takes to define a bear market. Which means that this bear market is already more than five months old, since the S&P 500 all-time high came on January 3.

Prior bear markets for the S&P 500

Start date End date Start price End price Months S&P 500 % change Prior Bull mkt % gain 9/7/1929 6/1/1932 31.92 4.40 32.8 -86.2 3/6/1937 4/29/1942 18.68 7.47 61.8 -60 325 5/29/1946 6/14/1949 19.25 13.55 36.5 -29.6 158 8/2/1956 10/22/1957 49.64 38.98 14.7 -21.5 266 12/12/1961 6/27/1962 72.64 52.32 6.5 -28 86 2/9/1966 10/7/1966 94.06 73.20 7.9 -22.2 80 11/29/1968 5/26/1970 108.37 69.29 17.8 -36.1 48 1/11/1973 10/3/1974 120.24 62.28 20.7 -48.2 74 11/28/1980 8/12/1982 140.52 102.42 20.4 -27.1 126 8/25/1987 12/4/1987 336.77 223.92 3.3 -33.5 229 7/16/1990 10/11/1990 368.95 295.46 2.9 -19.9 65 3/24/2000 10/9/2002 1527.46 776.76 30.5 -49.1 417 10/9/2007 3/9/2009 1565.15 676.53 17 -56.8 101 2/19/2020 3/23/2020 3386.15 2237.40 1.1 -33.9 401 1/3/2022 6/13/2022 4796.56 3749.63 5.3 -21.8 114 AVERAGE 18.6 -38.2 177.8

Source: S&P Dow Jones Indices

Since the modern S&P 500 index began in the late 1920s, the average bear market has translated into a 38% price decline lasting an average of almost 19 months.

But that's only the average. The longest bear market lasted 62 months, between 1937 and 1946, while the worst decline came as the Great Depression got underway and stocks plunged 86%.

The causes of every bear market are different, of course. This one is defined by the Fed tightening interest rates in reply to galloping inflation that's running at the fastest clip in 40 years, and the first European land war since World War 2.

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The last bear market in early 2020 was caused by the onset of Covid-19, a global pandemic, and the economic contraction that followed. The Global Financial Crisis created the 2007-2009 bear market as the housing market imploded. The bursting of the Tech Bubble led directly to the 2000-2002 bear market.

So, how does S&P Global define the end of a bear market? When the index reaches its low and later rises by 20%. Unfortunately for investors, that can only be known in hindsight.