The big equity bounce has continued, with the S&P 500 Index up more than 17% from the multi-year lows hit last Monday. The big question on many investors’ minds is could this be a bear market rally? After all, some of the most spectacular short-term bounces took place during bear markets.
According to our friends at Strategas Research Partners, during the 3-year bear market after the tech bubble burst in the early 2000s, the S&P 500 bounced more than 10% different 6 times on the way to falling 49.1%. During the financial crisis when the S&P 500 lost more than 56%, stocks bounced more than 10% three times, with a huge 27% rally in late 2008 eventually faltering. In other words, big bounces are quite normal, even during bear markets.
“The recent bounce has bulls feeling pretty good given how bad they felt just a week ago,” explained LPL Financial Senior Market Strategist Ryan Detrick. “But the reality is many major bottoms over the years tend to see a retest the previous lows, and big moves higher are the hallmark of bear markets.”
As shown in the LPL Chart of the Day, there have been 9 bear markets that officially lost 20% since 1950, and the average maximum bear market bounce during those bear markets was 14.5%. Although we are optimistic that stocks are carving out a major low, it probably won’t be an easy ride and a potential move back to the recent lows can’t be ruled out.
For more of our thoughts on current markets, please listen to the latest LPL Market Signals podcast here.
If you would like to learn more, please reach out to a Dedicated Financial Professional at Epic Capital Today.
Recently, you may have seen reports that a record-low number of homes are available for sale—roughly 1.03 million nationwide. If you compare that to the average number of homes for sale during the past 10 years, it’s no surprise that many hopeful homebuyers are having issues securing a home. But why exactly is the housing … Continue reading “Forces Driving the Housing Market”
It can be exhausting trying to keep up with the whims of Wall Street. Lately, the financial markets have been fixated on federal taxes and what may be proposed on Capitol Hill in the weeks and months ahead. Wall Street’s focus on taxes closely follows its attention on the 10-year Treasury yield. And it wasn’t … Continue reading “The Whims of Wall Street”
President Joe Biden introduced the much-anticipated American Jobs Plan, which outlines an approach to spend roughly $2.2 trillion on the nation’s infrastructure and other projects. As part of the legislative process, the Biden administration also laid out a proposal for paying for the domestic investment. The plan includes raising the corporate tax rate to 28% … Continue reading “Paying for the Infrastructure Bill”
Financially, many of us associate the spring with taxes – but we should also associate December with important IRA deadlines. This year, like 2020, will see a few changes and distinctions. December 31, 2021, is the deadline to take your Required Minimum Distribution (RMD) from certain individual retirement accounts.
There’s an old Wall Street maxim that says, “markets climb a wall of worry.” And these days, there’s plenty to worry about with the trend in long-term interest rates and bonds.
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