Big Stock-Market Gains Like This Don't Happen in Good Times

Ben Levisohn Markets Macey Rex Macey Stephen Suttmeier Commodity/Financial Market News Content Types Factiva Filters C&E Exclusion Filter N/DJN N/MKT N/WER Barrons.com Barrons Blogs Wires COMP DJIA Dow Jones Industrial Average Nasdaq Composite S&P 500 SPX CODES_REVIEWED Markets author Ben Levisohn author|Ben Levisohn topicid 8022 name Ben Levisohn extractedtext Ben Levisohn rank 1 codetype author code ben_levisohn nameformat surname_first author Ben Levisohn id Ben Levisohn barrons_display_subject BARMKTS barrons_display_subject|BARMKTS codetype BARRONS_DISPLAY_SUBJECT canbedisplaysubject true value BARMKTS source MANUAL status modified name Markets code BARMKTS djn N/MKT djn|N/MKT significance prominent name N/MKT why about source FACTIVA fcode N/MKT codetype djn code n_mkt onlinesignificance prominent djn N/DJN djn|N/DJN codetype djn value N/DJN source DJN-CONTROL status modified inactivebydefault true name N/DJN code n_djn djn N/WER djn|N/WER codetype djn value N/WER source DJN-CONTROL status modified inactivebydefault true name N/WER code n_wer first_publish_headline The Dow Just Had Its Best Day Since 1933. 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Gains Like That Don’t Happen in Good Times. The Dow Just Had Its Best Day Since 1933. Gains Like That Don’t Happen in Good Times. The Dow Just Had Its Best Day Since 1933. That Doesn’t Happen in Good Times

The Dow Jones Industrial Average just gained the most since 1933, while the S&P 500 had its biggest rise since 2008. Those aren’t good periods to emulate.

Big Stock-Market Gains Like This Don’t Happen in Good Times

The Dow Jones Industrial Average just gained the most since 1933, while the S&P 500 had its biggest rise since 2008. Those aren’t good periods to emulate.

https://www.barrons.com/articles/dow-jones-industrial-average-stocks-worst-drop-since-1987-51584045217?mod=article_inline https://www.barrons.com/articles/dow-jones-industrial-average-surged-stimulus-bill-51585084906 https://www.barrons.com/articles/dow-jones-industrial-average-hits-a-record-high-finally-51581549834 mailto:Ben.Levisohn@barrons.com The Dow Just Had Its Best Day Since 1933. Gains Like That Don’t Happen in Good Times. By Ben Levisohn Photograph by Joel Arbaje

Speed has been the hallmark of this bear market—but a speedy recovery probably isn’t in the works, even after the Dow Jones Industrial Average posted its biggest gain in more than 85 years.

The Dow soared 2112.98 points, or 11.37%, to 20,704.91, good enough for its biggest gain since 1933. The other indexes’ gains weren’t quite as spectacular but were none too shabby. The S&P 500 jumped 9.38% to 2447.33, its biggest gain since October 2008. The Nasdaq Composite climbed 8.12% today to 7417.86, its largest gain since, um, seven trading days ago.

With today’s massive gain, the Dow has shaved 7.15 percentage points—or just under a fifth—off its 37.09% drop from its Feb. 12 high, and is down “only” 29.94% since peaking. The S&P 500 has recovered 18% of its losses. Of course, we’ll need more days like this one to even come close to erasing the bear market’s losses.

Everything about this bear market has been fast. No market went from an all-time high to a bear market as quickly as this one. Bank of America technical analyst Stephen Suttmeier notes that the S&P 500 managed to tumble more than 30% in just 22 days, the fastest on record. That’s not good news.

“To place this into historical context, the second, third and fourth fastest pullbacks were the Great Depression era corrections from 1934, 1931 and 1929, respectively,” Suttmeier wrote in a March 23 note. “This is not good company for 2020.”

Even today’s big gain in the S&P 500 looks less rosy when put in historical context. The index’s 9.38% rise made it the 10th largest ever, knocking March 13’s 9.3% gain to 11th place. This is not a list you want to make, however, note the folks at Bespoke Investment Group. “It’s great to finally get a respite from the beat downs of the last month, but we would note that looking at the S&P 500’s ten best days on record, today’s gain doesn’t share the greatest company,” Bespoke writes. “Of the nine other days on the list, they all either occurred during the Great Depression (7) or the Financial Crisis (2).”

And for those who prefer to look at more recent history, today’s gain knocked the S&P 500’s 9.3% rise on March 13 out of the top 10. The index followed that up with a 12% drop on March 16, the next trading day.

In fact, bear markets have often been slow to find a bottom, writes Red Tortoise’s Rex Macey. The 1929 bear market that launched the Great Depression took 2.7 years to find a bottom, while the bear that started in 1937 took 5.1 years. The bear that started in 1973 took 1.6 years to trough, while the dot-com bust took 2.5 years. The financial-crisis bear took 1.4 years from top to bottom. “It’s particularly interesting that the market has fallen farther faster than in any of these bear markets,” Macey writes. “It could take a long time to recover.”

The one exception: 1987, a selloff that had more to do with liquidity and positioning than anything economic, though it certainly didn’t feel that way at the time. Even then, the market also dropped below the initial low before finding a bottom.

Maybe this time will be different. Then again, maybe not.

Write to Ben Levisohn at Ben.Levisohn@barrons.com

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.