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Market Commentary - The Second Year Of The Bull Market Begins

The bear market ended one year ago this week, finishing one of the fastest and most vicious bear markets of all-time—one that led to a drawdown of 34%. Things have come full circle now, as stocks have staged a furious rally, with new highs happening across the globe as the economy recovers at a record pace.  We take a look back at what happened last March, while also examining how previous bull markets did during the second year of their existence.

A Look Back

Although we aren’t sure we want to, let’s take a look back at the bear market and try to put in perspective just how historic and devastating it was for investors, while also pointing out some incredible positives. Here are five amazing stats to summarize the bear market and bounce back:

  • Fastest bear market ever. Although it was only a one-month-long bear market, the S&P 500 Index fell 33.9% from the February 19, 2020 peak until the March 23, 2020 low. Along the way, it set the record for the fastest 20% bear market ever (only 16 days, topping the previous record from 1929).
  • March 16, 2020. This day will go down in history as one of the worst days ever for stocks. The Dow Jones Industrial Average fell 12.9%, which was the fourth-worst day in the nearly 125-year history of the Dow. Only the crash of 1929, crash of 1987, and the day that trading started (after being halted for months) during World War I were worse than March 16, 2020.
  • The most volatile month ever. Huge swings (both up and down) were quite common in March 2020. In fact, looking at the Dow, the average daily move (up or down) during March 2020 was an astounding 5.3% per day. The previous record was 3.9% during November 1929, again showing just how March 2020 was like nothing we’ve ever seen before.
  • The bounce back was even more impressive. After falling nearly 34%, it took only five months for the S&P 500 to recover its losses, the fastest bounce back ever for a 30% loss or greater. To put it in perspective, the S&P 500 also lost 34% in 1987, but that recovery took 20 months to get back to new highs.
  • From red to green. At the lows in 2020, the S&P 500 was down 30.7% for the year, but when all was said and done it closed up 16.3%. This was the first year in history stocks were down 30% at one point during the year and finished the year in the green.

Now What? The Bull Turns Two

Incredibly, the S&P 500 has increased more than 74.9% since the lows a year ago (as of March 19, 2021), making it the best start to a bull market ever. After such a strong first year, where might this bull market go in its second year?

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This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.

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The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

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All index data from FactSet.

Please read the full Outlook 2021: Powering Forward publication for additional description and disclosure.

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