Investor optimism currently reigns as the S&P 500 flirts with its all-time highs, signifying a stark contrast to the turbulent times of four years ago post-COVID-19. The equity market’s downward spiral in early 2020, triggered by the global pandemic, came after an impressive 11-year uptrend starting from March 2009.
A Glimpse into the 2020 Market Crash: The onset of the pandemic wreaked havoc on human lives and disrupted global operations, leading to a substantial downturn in the market in early 2020. The global stock markets began their plunge in late February 2020, with a particularly grim day on March 16, 2020, when the S&P 500 hit a multi-year low of 2,386.13, a 12% plunge, the largest during that period of crisis.
Dubbed “Black Monday II,” this day followed the previous Monday’s descent, dubbed “Black Monday I,” when the broader gauge fell by about 8%. Stocks across sectors were offloading, with even Apple, then the market-cap leader, dropping over 12% in a single day.
The Climb Back: Global cooperation among central banks and governments heightened efforts to reverse the market downturn, propelling the S&P 500 Index on an upward trajectory, buoyed by stimulus initiatives. As the U.S. economy gradually emerged from recession, the rally persisted through 2021 but met a snag in 2022. Stimulatory actions stoked inflation, prompting the Federal Reserve to hike the Fed funds rate aggressively, dampening consumer sentiment and pressuring businesses with stringent credit conditions.
The market’s fortunes shifted in 2023, capitalizing on the economy’s robustness in a high-rate environment, marking an upward trajectory that has endured unabated ever since.
Reaping SPY Returns: The SPDR S&P 500 ETF Trust (NYSE: SPY), an exchange-traded fund mirroring the S&P 500 Index, closed at $224.53 on March 16. Hypothetically investing $1,000 in SPY during its depressed 2020 state would have secured 4.5 units of the ETF, valued at $2,271 presently, delivering a 127% return over the four-year timeframe.
At the close of Friday’s session, SPY dipped by 0.69% to $509.83, as evidenced by Benzinga Pro data.
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