- The coronavirus downturn differs significantly from past event-driven bear markets and stands to hit equities even harder, Goldman Sachs said Tuesday.
- The firm analyzed 27 bear markets since 1880 to estimate the current slump's length and depth.
- Though stocks' current level matches declines seen in past bear markets, factors unique to the coronavirus threat could drive prices even lower, the bank's chief global equities strategist said.
- Here are four key differences between the coronavirus-fueled slide and past bear markets, from historically low interest rates to the pandemic's unpredictable nature.
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The coronavirus's "one-off 'shock'" dragged US stocks into bearish territory faster than any past tumble, and a handful of unique factors suggest it will be harder than usual to recover, Goldman Sachs said Tuesday.
The bank analyzed 27 bear markets since 1880 to estimate how long and deep the latest downturn will last. Markets' latest decline brought forth an event-driven bear market, the analysts said, as opposed to cyclical and structural declines seen throughout history. The coronavirus drove a plunge of "unprecedented nature," and uncertainty around the pandemic's future contributed to all-time high market volatility, Peter Oppenheimer, chief global equities strategist at Goldman, wrote.
Even after the Dow posted its biggest gain in 87 years on Tuesday, equities sit well below bullish levels as investors wait for the government to issue trillions of dollars in fiscal relief.
Past event-driven slumps saw stocks fall 29% and remain in bearish territory for nine months on average, according to the bank, yet it expects the coronavirus to buck the trend. Here are the four characteristics differentiating the current market from past event-driven slides, according to Goldman Sachs.
