Market decline

This is the fastest 30% drop in the stock market on record

Twenty-two days.

That’s all it took for the S&P 500 to fall 30% from its all-time high, the fastest drop of this magnitude in history.

The second, third, and fourth fastest 30% declines all occurred during the Great Depression in 1934, 1931, and 1929, respectively, according to data from Bank of America Securities.

“This is not a good company for 2020,” Stephen Suttmeier, technical research strategist at the bank said Monday. “The 2020 correction continues to make history, having previously claimed the title as the third quickest end of a bull market dating back to 1928.”

The S&P 500 fell nearly 15% last week alone, pushing the benchmark 32% below its all-time high reached on February 19. Investors continued to dump stocks at a rapid pace as they feared the economic fallout from the coronavirus would overtake the actions of central banks and global governments.

The losses continued on Monday.

“More expensive” than a recession

With such an extreme drop in speed, some on Wall Street believe investors are forecasting an even worse scenario than a recession, warning that there could be more pain to come before the market hits a turning point.

“At Friday’s new low of 2,305, the S&P 500 was poised to emerge from the recession and prepare for a more onerous scenario,” Lori Calvasina, head of US equity strategy at RBC, said in a note Monday. .

Calvasina noted that recent price action in the S&P 500 resembled the trajectory through the heart of the financial crisis in 2008. If the benchmark stays on its current trajectory, history suggests it could bottom out. in the 1600 – 1800 range before going back up, Calvasina mentioned.

Shares fell again on Monday even after the Federal Reserve pledged to buy limitless assets to support markets amid the coronavirus pandemic. Investors waited for lawmakers to agree on a vital stimulus deal to save the economy.

“Don’t think that a stabilization in the stock markets is a sign of a dip in investment in US stocks, as history strongly suggests otherwise and we are aware that 2020 is running the 2008 Playbook at double / triple time. “DataTrek Research co-founder Nick Colas said in a note. “The next flush could, in other words, be days rather than weeks away.”

Goldman Sachs also warned that the liquidation would get worse before it improves, as investors’ equity allocation is still above previous market lows in 2001 and 2008.

– CNBC John schoen and Michael bloom contributed to this report.

To subscribe to CNBC PRO for exclusive news and analysis, and live business day programming from around the world.


Source link