4 charts show why the 2020 bear market was so unusual

The S&P 500 closed at a record high Tuesday, heralding the start of a new bull market. The bear market that preceded it was the shortest in history, lasting only 33 days.


The S&P 500 set a new record on Tuesday, officially ending the shortest bear market in history and ushering in a new bull market. The index closed at 3,389.78, an increase of 52% from its low point on March 23.

This year has been a wild one for the stock market. After reaching an all-time high on February 19, the S&P 500 declined 34% in just 33 days as the coronavirus pandemic drove a dramatic sell-off. In a 26-day span from February 24 to March 30, there were an unprecedented 19 daily moves of 3% or more as investors struggled to determine the pandemic's impact on the economy. Moves of this magnitude have happened about four times per year since 1980.

But things quickly turned around. The S&P 500 rose 18% in the three days after hitting its low point and continued to surge on the back of big tech stocks, including Amazon, Microsoft, Apple, Alphabet, and Facebook, all of which have benefited from stay-at-home orders.

What are bear and bull markets?

An index enters a bear market when it falls at least 20% from a recent high. A bear market officially ends once the market hits a new closing high, like the S&P 500 did on Tuesday.

A bull market, by contrast, is a rally of at least 20%, typically from a bear market low. Like a bear market, it only becomes official once the market hits a new record.

To help remember which is which, picture the animals the markets are named after. A bear attacks by swatting its paw in a downward motion, while a bull attacks by thrusting its horns upward.

Pinpointing the date when a bear market ends and a bull market begins can be confusing. That's because a bull market technically begins on the date of the most recent market low, even though it doesn't become official until later on. This is why some experts predicted we were already in a bull market months ago.

The new bull market became official on Tuesday when the S&P 500 set a new high. It actually started March 23, when the S&P 500 hit its most recent low point. This means that the current bull market is already almost five months old.

A short sell-off and a quick recovery

This year's bear market was the shortest in history: It lasted just 33 days. Since World War II, bear markets have lasted about 13 months on average.

The longest bear market, which began in 2000 after the dot-com bubble burst, lasted almost 31 months.

The speed of the recovery from the bear market was also historic. The S&P 500's gains since the lowest point on March 23 have been the largest in a 103-day period in 87 years, according to a Reuters report citing Refinitiv data

Since World War II, a typical recovery has taken almost two years.

Strategists that CNBC surveyed recently predicted that the S&P 500 will finish the year just 2.8% below where it started. Back in April, they were forecasting a decline of 12%.

"The market has taken on us on a roller coaster ride that no one would have believed," Chris Zaccarelli, chief investment officer for Independent Advisor Alliance in Charlotte, North Carolina, said in an emailed statement. "Even the most optimistic people in March were unlikely to have expected the market to recoup all of its losses in less than five months."

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