Stocks: Recent Surge in S&P 500 and Market History

Two weeks ago, the S&P 500 added more than 12% over the four days. As a reminder, markets were closed on April 10 at it was a holiday. However, the U.S. stocks more precisely this index fell at the beginning of the last week. Nevertheless, the index strengthened its position on April 14 before falling again on April 15.

It is worth noting that on April 15, the S&P 500 fell 2.2% 2,783.36. Moreover, the Dow Jones Industrial Average fell 445.41 points or 1.9% to 23,504.35. At the same time, the Nasdaq Composite dropped 1.4% to 8,393.18. Moreover, the Dow Jones and S&P 500 had their worst session since April 1.

What happens after the S&P 500 surge

Interestingly, a market gain that happened two weeks ago is not typical. Moreover, in the past two decades, there have been only five cases when the index added 10% over the four days. Also, two of them came during the worst period of the financial crisis.

Furthermore, in the two weeks after such gains, stock indexes Dow Jones and S&P 500 both posted negative average returns. However, both avoided any dramatic pullback, down less than 1%.

Also, in the month following these rapid gains the S&P 500 as well as Dow Jones posted one-month gains over 1%.

Importantly, the worst periods when rapid gains were followed by declines occurred late 2008. In October and November, the S&P 500 posted returns of 14% and 18% in two separate four-day trading windows. However, after that period both Dow Jones and the S&P 500 were down in the two weeks that followed rapid gains.
Let’s get back to 2020. The coronavirus pandemic created additional pressure for the stock market. The International Monetary Fund expects the worst recession since the 1930s.

Hopefully, analysts from Goldman Sachs said that the market is unlikely to make new lows if there is no second surge in infections.