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Comparing S&P 500's fall in 2020 and 2008: Is the bottom in place?

Updated : March 30, 2020 03:10 PM IST

As markets around the world sell-off, CNBC-TV18 tries to analyse the 2020 market scenario due to the coronavirus crisis with that 2008 economic crisis.

Taking 2008 global financial crisis as a template, the market response has been similar. In 2008, we had unprecedented levels of intervention by central banks, governments, etc. Similarly, now too we have that but in double the quantity and half the time.

In August 2008, the S&P 500 was at 1,313 and had a vertical 36 percent fall. In October, it was at 838. From there, it saw 3 meaningful bounces -- between October 10 and October 14, the S&P 500 went from 839 to 1,044, a 24.5 percent bounce. October 28 to November 4, the index bounced almost 27.5 percent from 845 to 1,007. And November 21 to January 6, 2009, the S&P 500 bounced 27.2 percent from 741 to 943.

In 2020, S&P 500 had made a high of 3,393 in February. From there, it fell 35 percent to 2,191 on March 23, 2020. However, from March 23 to March 26 there was a bounce back from 2,191 to 2,637 that is a bounce of 20 percent, which is almost exactly similar to the fall and rise that we saw in 2008.

However, in 2008 crisis, the lowest level on S&P 500 was another 29 percent fall at 666 on March 6, 2009 which was the bottom. So, if we compare 2020 to the 2008 crisis, then the bounce seen last week is just a bounce and we have begun the slow, long and painful process of trying to find a bottom comprised of many bounces and sell-offs.

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