The bear markets have a long history with the S&P 500, Nasdaq Composite and Dow Jones Industrial Average indices, and they have returned as a result of the economic turmoil caused by inflation, rising interest rates, high petrol prices and the fallout from the Russian invasion of Ukraine .
Some bear markets have emerged during recessions with a decline in gross domestic product and high unemployment, but this is not the case with today’s bear markets, at least so far.
The S&P 500 joined the Nasdaq Composite in a bear market on June 13 after registering a 21% decline since reaching its peak of 4,796 on January 3, 2022. S & P̵[ads1]7;s previous bear market was the shortest lasting about a month from 19. February, 2020, to March 23, 2020, when the index fell 34%, CBS reported.
Nasdaq already entered the bear market three months ago on March 7, when it had fallen 20.1% from the highest of 16,057 on November 19, 2021. The technology-filled index on June 13 had fallen to 32% below the highest of November 16, 057. . 19, 2021.
The Dow Jones Industrial Average is approx. 17% down from its record high of 36,799 on January 4, 2022.
Bear markets can be short- or long-term
A bear market is defined as when an index falls 20% from the last highest. The shortest bear market recorded since 1928 is the S&P 500s February 19, 2020 to March 23, 2020, a 33-day period caused by the covid pandemic, according to Seeking Alpha. Prior to this one-month bear market, the S&P 500 recorded a 62-day bear market during the financial crisis from 6 January 2009 to 9 March 2009, when the index fell above 27%.
Scroll to Continue
S&P had a much longer bear market during the financial crisis from 9 October 2007 to 20 November 2008, or 408 days, when the index fell almost 52%. The longest S&P bear market stretched from 11 January 1973 to 3 October 1974, amounting to 630 days or 21 months, when the index fell above 48%.
Not surprisingly, S&P had 10 bear markets during the Great Depression of the 1930s.
The average length of an S&P 500 bear market, based on Seeking Alpha’s figures, is 268.3 days or about 21 months.
Nasdaq has had some notable bear markets since the index was launched in 1971, according to Motley Fool. The worst bear market took place while the dot-com bubble burst from early 2000 when the index fell by 75% in mid-October 2002. The bear market continued through the financial crisis in 2008 and did not end until November 2013.
The index had another devastating bear market in 1973, when the Nasdaq fell almost 60% and did not climb out of the bear market in about four years. The index had other bear markets, including one in October 1987 as a result of a stock market crash, in July 1990 and early 1982, both of which coincided with recessions.
The Dow Jones Industrial Average entered a bear market on March 11, 2020 for the first time in 11 years. The index fell 38% from its highest of 29,568 on 12 February 2020 to 23 March 2020, before recovering, Investopedia reported.