Posted on June 10, 2020 by Keith Gangl, CFA, by Gradient Investments
The recent speed of U.S. stock market movements up and down is unprecedented. The rapid selloff which started in February and ended 33 days later in March was the fastest peak to trough correction in market history. The subsequent rally off the lows that followed was equally impressive in speed and magnitude, recovering most of the losses in less than two months.
As we pointed out in our April market reflection, Bear Markets and Rebounds, bear markets are painful and the length of time to recover from a bear market varies from three months to three years. The April market reflection also noted bear markets tend to be shorter in length than bull markets and proper patience is required during periods of market stress. Historically, that patience has led to greater future prosperity.
Currently, the stock market is roughly 5% off its record high set on February 19, 2020 and is basically unchanged year-to-date. This is remarkable considering global economies shut down and are now only in the beginning stages of reopening. In addition, the swiftness of the market recovery is also extraordinary. The chart below highlights the largest 50-day market gains ever. The recent fifty-day period ending June 3rd, 2020 (red arrow) is the largest fifty-day gain ever for the market, returning a whopping 37.7%.