Since falling into a bear market earlier this month, stocks have struggled for direction, but history shows that if the economy avoids a downturn, stocks will rebound.
Analysts say the current bear market is not as bad as previous ones.
The S&P 500 fell into a bear market on June 13 and has been falling ever since.
Over half of bear markets since World War II have preceded a recession but those that did not lead to an economic downturn tend to last for less time.
Sam Stovall, chief investment strategist for CFRA Research, says that the bull market took 161 days to go from its peak to a 20% decline threshold.
He says that a quick descent into a bear market tends to signal more "shallow" declines ahead rather than "mega-meltdown" declines.
In the past five bear markets where the S&P 500 has reached a 20% decline threshold, the average market decline has been less than 27%.
In all 14 bear markets since 1945, the S&P 500 fell an average of 32% and took an average of 12 months to recover their losses.
The shortest bear market was in March 2020 when the US economy was in a brief recession. The bear market after the dot-com crash lasted 31 months but that downturn lasted only one month. The stock market bottomed out in just over a month during the 2020 bear market.
Lindsey Bell, chief money & markets strategist for Ally, says that the current bear market is light compared to past ones. She notes that if the Fed is able to push inflation lower, it will make a "shallow bear market" a possibility.
The bear market may bottom soon if a full-blown crisis can be avoided. With over half of the last five bear markets ending in three months or less, he says, the current bear market may be closer to a bottom than people think.
Consumer confidence is hitting a new low and the recession fears are still going strong.
Powell says that there is compelling evidence that inflation is slowing.
The last week of stocks was the worst since March 2020.
How to invest during a recession is a topic discussed by experts.
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