All of the stock market’s gains since the end of 2018 have been erased. We sifted through some stats from the decline.

Our Top Market Takeaways for March 13, 2020.


The end of the bull market

The COVID-19 pandemic is now directly impacting millions of lives around the world. Travel bans and restrictions have been put into place in many countries (with the United States joining in this week), colleges and schools everywhere are shutting their doors and moving to virtual classes, New York City declared a state of emergency, the NCAA canceled its marquee March Madness contests, the NBA suspended its season until further notice, Ireland canceled all St. Patrick’s Day parades, Tokyo’s Nakameguro district canceled its Cherry Blossom Festival, the list goes on…

As we tend to do in Top Market Takeaways, we’ll use this note to focus on the impact it’s having on the investment landscape. Markets saw meaningful losses across the board this week. Stocks sank with a vigor not seen in decades. The S&P 500 is officially in bear market territory, now -27% from its record high set less than a month ago. All gains since the end of 2018 have been erased.

As we close out one of the worst weeks we’ve seen in markets since the global financial crisis, we’ve put together the list below to help contextualize the end of this decade-long bull market.*

The worst days. On Thursday, the S&P 500 (-9.5%) sold off the most since 1987’s Black Monday. Canada’s S&P/TSX (-12.3%) had its worst day since 1940, the UK’s FTSE 100 (-10.9%) since 1987, and Germany’s DAX (-12.2%) since 1989. Brazil’s Bovespa (-14.8%) tanked to bring its year-to-date losses to almost -40%. But that wasn’t even the worst of it. The Stoxx Europe 600 (-11.5%) had its worst day ever. Same goes for Italy’s FTSE MIB (-16.9%), which has the most cases of COVID-19 after China.  

The biggest losers. For S&P 500 stocks, 99.6% are now in correction territory (down -10% or more from their 52-week high), 88.5% are in bear market territory (down -20%), and 60.0% are in recession territory (down -30%). Those numbers are equally acute for Europe—99.5% of stocks in the Stoxx Europe 600 are in correction territory, 95.2% are in bear market territory, and 73.0% are in recession territory.

As for sectors, you might not be surprised to learn that 100% of companies in the S&P 500 Energy sector are now in a bear market. Blame OPEC+’s renewed fight for market share. Financials (98%) and Consumer Discretionary (97%) aren’t too far behind. Faring the best? Look at “defense-playing” sectors like Consumer Staples (64%), Health Care (73%) and Utilities (75%).

The chart shows the S&P 500 sectors and that, as of March 12, 2020, 446 of the 500 companies are in a bear market, indicating that 89% of companies are in a bear market.

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The lone wolves. Only two companies in the S&P 500 are within 10% of their 52-week highs: Tiffany & Co. and Digital Realty Trust.

The wildest swings. The VIX, a common measure of implied volatility in the S&P 500, is currently above 75 and has surged 60 points since the S&P’s peak on February 19. This is the fastest increase in the VIX over a comparable period on record. Yes, even faster than the global financial crisis. Based on this measure, investors are expecting daily moves of 4.7% for the next month!

Record moves. U.S. 10-year Treasury yields traded to an intra-day low of 31 basis points (bps), an all-time low; 30-year Treasuries hit 1%.

Unloved. Preferred equities (largely issued by financial institutions) lost almost -9% on Thursday, their worst day since the global financial crisis. High yield bonds lost almost -8% this week…also their worst since the crisis.

The safety net? Policymakers are responding to the ongoing disruption caused by the COVID-19 outbreak and the associated turmoil in financial markets. After an emergency rate cut of 50 bps last week, the Fed essentially restarted quantitative easing (QE) by announcing that the $60 billion in Treasury bills it’s been purchasing each month will be spread across the yield curve (not just focused on short-term debt) for the next month. It also introduced efforts to support repurchase markets and improve market liquidity. We expect more measures are on the way, including moving policy interest rates to 0% by next week.

The People’s Bank of China (PBOC) has been introducing accommodative measures since the outbreak began. And central banks from Australia to Norway to the United Kingdom have all announced rate cuts and robust stimulus plans. The European Central Bank, however, disappointed investors yesterday, leaving rates unchanged and only modestly ramping up QE and its TLTRO program.

Down and out? Like we said, the S&P 500 is down -27% from its record highs, from 3,386 on February 19 to 2,481 at yesterday’s close. In order to fully recover, what would it take? And how long? In order for stocks to climb back to their highs within one year, the S&P 500 would need to rally +39% from current levels. To achieve the same feat over two years, we’re looking at a 19% annual total return. For five years, 8% per year, and for 10 years, 5% per year.

The bar chart shows the percentage average annual total return needed for the S&P 500 to get back to market highs. The bar chart indicates the average annualized return and cumulative total return required to get back to peak, for 1 to 10 years.

We’ll leave you with this thought. Even after this -27% drop, S&P 500 investors from the bottom of the market in 2009 have earned nearly a +15% annualized return.


* A bull market ends when a bear market begins. A bear market is defined as a peak to trough decline of -20% or more. 



All market and economic data as of March 2020 and sourced from Bloomberg, FactSet and Gavekal unless otherwise stated.

We believe the information contained in this material to be reliable but do not warrant its accuracy or completeness. Opinions, estimates, and investment strategies and views expressed in this document constitute our judgment based on current market conditions and are subject to change without notice.


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