Bear market? We’ve seen this before

M1 Team
M1 Team May 27, 2022
Man looking at computer screen with stock market data a banner overlay that reads "Weekly Wrap Up: market recaps every Friday"

Today’s roundup includes the recent history of bear markets, a new international partnership, and a tough week for social media giants.

Also in this edition:

  • 2022’s richest athletes
  • A new report from the Fed
  • 100 years of auto history

Here’s how the markets performed this week: 

Chart of the following weekly stock performance:
Dow Jones: +1,384.06 (+4.43%)
NASDAQ: +352.15 (+3.09%)
S&P 500: +157.05 (+4.03%)
Russell 2000: + 66.63 (+3.75%)
Bitcoin: +156 (+0.53%)
Ethereum: -0.84 (-6.46%)
Stock data reflects performance from 5/20/2022 to 5/26/2022 market close. Crypto data reflects performance from 5/20/2022 to 5/26/2022 4 pm ET.


A brief history of bear markets 

As the S&P dipped last Friday, it met the criteria of a bear market. The news has been taking over headlines, but what officially signals the swap from a bull market? 

A bear market is in effect when an index falls 20% or more from a recent high. And for a time on Friday, the S&P was down 20% from its January peak. 

Will this run be like the others? Bespoke Investment Group points out that “no two bear markets are exactly alike” and that eight out of 14 prior bear markets since World War II have preceded recessions (the other six did not). 

Here’s a look at past bear markets: 

Timeline of bear markets in the US:
1929: The stock market crash of 1929 becomes the central event in a grinding bear market that slicked 89% off the value of the Dow Jones Industrial Average over approximately three years.
1960-70s: Stock market declines of 36.1% in the late 1960s and 48.2% in the early 1970s.
2000-2002: The dotcom crash occurs and the S&P 500 tumbled by 36.8% over the course of 1.5 years.
2007-2009: The economy goes into recession and enters the second worst bear market.
2007-2009: Oil prices were in a bear market from May 2014 to February 2016.
2020: On March 11, 2020, the Dow Jones Industrial Average entered a bear market for the first time in 11 years due to the pandemic.
Image courtesy of Investopedia

Keep in mind, a recession on the back end of a bear market can affect stock performance. Those that occur before a recession are more prolonged (lasting 449 days compared to 198 days with no recession) with steeper losses (an average decline of 35% compared to 28%), according to Bespoke.

US announces Asian economic deal 

On Monday, the US announced aan alliance with Japan, South Korea, and Australia for for the Indo-Pacific Economic Framework. The wide-ranging plan is designed to grow America’s “economic leadership” in the Indo-Pacific territory. 

The group aims to set rules regarding: 

  • Supply chains 
  • Worker’s regulations  
  • Decarbonization 
  • The digital economy  

President Biden says the framework may help lower costs by fortifying supply chains, with the hope of chipping away at domestic inflation.  

SNAP out of it 

Snap (SNAP) shares dropped 40% on Tuesday morning. As the social media network heads for its worst day in history, it’s dragging down other social platforms with it. 

This drop follows Snap’s warning to investors that it won’t meet revenue and earnings targets this quarter.  

“Since we issued guidance on April 21, 2022, the macroeconomic environment has deteriorated further and faster than anticipated,” Snap said in an SEC filing. Shares are down 83% from a 52-week high in September 2021 and an overall 70% year to date. 

Here’s how the news affected other tech companies: 

  • Meta: -9% 
  • Pinterest: -26% 
  • Alphabet: -8% 
  • Twitter: -3% 

Quick hits 


Well, well, wellness

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  • What is financial wellness?  
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Picture of a smiling family going on a nature walk with the M1 logo in the bottom right corner.

This week in finance history

May 26, 1927 

The last Model T drives off the assembly line. Ford produced over 15 million Model Ts in the 19 years their signature car was in production. This run was the longest in automotive history for almost half a century, until the Volkswagen Beetle passed it in 1972.  

So, what’s changed over the last century? Let’s compare. 

US vehicle production:  

  • 1928: 4.36 million 
  • 2021: 9.16 million 

US car registrations: 

  • 1928: 21.38 million 
  • 2022: 289.5 million 

Ford advertising: 

Ford auto vintage advertising poster
Ford auto Ford Focus advertising

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