How the S&P 500 Performed During Major Market Crashes
How the S&P 500 Performed During Major Market Crashes
Like spectacular market peaks, market crashes have been a persistent feature of the S&P 500 throughout time.
Still, the forces underpinning each rise and fall are often less clear. Take the COVID-19 crash, for example. Despite lagging economic growth and historic unemployment levels, the S&P 500 bounced back 47% in just five months, in a stunning reversal.
Drawing data from Macrotrends, the above infographic compares six historic market crashes—examining the length of their recoveries and the contextual factors influencing their durations.
The Big Picture
How does the current COVID-19 crash of 2020 stack up against previous market crashes?
|Title||Start — End Date||Duration (Trading Days)||% Drop|
|Black Tuesday / Great Crash*||Sep 16, 1929 — Sept 22, 1954||300 months (7,256 days)||-86%|
|Nixon Shock / OPEC Oil Embargo||Jan 11, 1973 — Jul 17, 1980||90 months (1,899 days)||-48%|
|Black Monday**||Oct 13, 1987 — May 15, 1989||19 months (402 days)||-29%|
|Dot Com Bubble||Mar 24, 2000 — May 30, 2007||86 months (1,808 days)||-49%|
|Global Financial Crisis||Oct 9, 2007 — Mar 28, 2013||65 months (1,379 days)||-57%|
|COVID-19 Crash***||Feb 19, 2020 — Ongoing||5 months+ (117+ days)||-34%|
Price returns, based on nominal prices
*Black Tuesday occurred about a month after the market peak on Oct 29, 1929
**The market hit a peak on Oct 13th, prior to Black Monday on Oct 19,1987
***As of market close Aug 4, 2020
By far, the longest recovery of this list followed the devastation of Black Tuesday, while the shortest was Black Monday of 1987—where it took 19 months for the market to fully recover.
Let’s take a closer look at each market crash to navigate the economic climate at the time.
After the Fall
What were some factors that can help provide context into the crash?
1929: Black Tuesday / Great Crash
Following Black Tuesday in 1929, the U.S. stock market took 7,256 days—equal to about 25 years—to fully recover from peak to peak. In response to the market crisis, a coalition of banks bought blocks of shares, but with negligible effects. In turn, investors fled the market.
Meanwhile, the Federal Reserve Board rose the discount lending rate to 6%. As a result, borrowing costs climbed for consumers, businesses, and the central banks themselves. The tightening of rates led to unintended consequences, with the economy capitulating into the Great Depression. Of course, factors that contributed to its prolonged recovery have been debated, but these are just a few of the actions that had implications at the time.
1973: Nixon Shock / OPEC Oil Embargo
The Nixon Shock corresponded with a series of economic measures in response to high inflation. Soaring inflation devastated stocks, consuming real returns on capital. Around the same time, the oil embargo also occurred, with OPEC member countries halting oil exports to the U.S. and its allies, causing a severe spike in oil prices. It took seven years for the S&P 500 to return to its previous peak.
1987: Black Monday
While the exact cause of the 1987 crash has been debated, key factors include both the advent of computerized trading systems and overvalued markets.
To curtail the impact of the crash, former Federal Reserve chairman Alan Greenspan aggressively slashed interest rates, repeatedly promising to take great lengths to stabilize the market. The S&P took under two years to recover.
2000: Dot Com Bubble
To curb the stratospheric rise of U.S. tech stocks, the Federal Reserve raised interest rates five times in eight months, sending the markets into a tailspin. Virtually $5 trillion in market value evaporated.
However, a number of well-known companies survived, including eBay and Amazon. At the time, Amazon’s stock price cratered from $107 to $11 while eBay lost 75% of its market value. Meanwhile, a number of Dot Com flops included Pets.com, WorldCom, and FreeInternet.com.
2007: Global Financial Crisis
Relaxed credit policies, the proliferation of subprime mortgages, credit default swaps, and commercial mortgage-backed securities were all factors behind the market turmoil of 2007. As banks carved out risky loans packaged in opaque tranches of debt, risk in the market accelerated.
Similar to 1987, the Federal Reserve initiated a number of rescue actions. Interest rates were brought down to historical levels and $498 billion in bailouts were injected into the financial system. Crisis-related bailouts extended to Fannie Mae and Freddie Mac, the Troubled Asset Relief Program (TARP), the Federal Housing Administration, and others.
2020: COVID-19 Crash
In 2020, historic fiscal stimulus measures along with trillions in Fed financing have factored heavily in its swift reversal. The result has been one of the steepest rallies in S&P 500 history.
At the same time, the economy is mirroring Great Depression-level unemployment numbers, reaching 14.7% in April 2020. In short, this starkly exposes the sharp disconnect between the markets and broader economy.
History offers many lessons, and in this case, a view into the shape of a post-coronavirus market recovery.
Although the stock market is likely rallying off Fed liquidity, investor optimism, and the promise of potential vaccines, it’s interesting to note that the trajectory of this crash in some ways resembles the initial rebound shown during the Great Depression—which means we may not be out of the woods quite yet.
As the S&P 500 edges 2% shy of its February peak, could the market post a hastened recovery—or is a protracted downturn in the cards?
This graphic has been inspired by this Reddit post.
Mapped: Renewable Energy and Battery Installations in the U.S. in 2023
This graphic describes new U.S. renewable energy installations by state along with nameplate capacity, planned to come online in 2023.
Renewable and Battery Installations in the U.S. in 2023
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Renewable energy, in particular solar power, is set to shine in 2023. This year, the U.S. plans to get over 80% of its new energy installations from sources like battery, solar, and wind.
The above map uses data from EIA to highlight planned U.S. renewable energy and battery storage installations by state for 2023.
Texas and California Leading in Renewable Energy
Nearly every state in the U.S. has plans to produce new clean energy in 2023, but it’s not a surprise to see the two most populous states in the lead of the pack.
Even though the majority of its power comes from natural gas, Texas currently leads the U.S. in planned renewable energy installations. The state also has plans to power nearly 900,000 homes using new wind energy.
California is second, which could be partially attributable to the passing of Title 24, an energy code that makes it compulsory for new buildings to have the equipment necessary to allow the easy installation of solar panels, battery storage, and EV charging.
New solar power in the U.S. isn’t just coming from places like Texas and California. In 2023, Ohio will add 1,917 MW of new nameplate solar capacity, with Nevada and Colorado not far behind.
|Top 10 States||Battery (MW)||Solar (MW)||Wind (MW)||Total (MW)|
The state of New York is also looking to become one of the nation’s leading renewable energy providers. The New York State Energy Research & Development Authority (NYSERDA) is making real strides towards this objective with 11% of the nation’s new wind power projects expected to come online in 2023.
According to the data, New Hampshire is the only state in the U.S. that has no new utility-scale renewable energy installations planned for 2023. However, the state does have plans for a massive hydroelectric plant that should come online in 2024.
Renewable energy is considered essential to reduce global warming and CO2 emissions.
In line with the efforts by each state to build new renewable installations, the Biden administration has set a goal of achieving a carbon pollution-free power sector by 2035 and a net zero emissions economy by no later than 2050.
The EIA forecasts the share of U.S. electricity generation from renewable sources rising from 22% in 2022 to 23% in 2023 and to 26% in 2024.
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