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Market Extra: The Dow just joined the S&P 500 in a bear market: What investors need to know

The Dow Jones Industrial Average couldn’t outrun the bear.

The blue-chip gauge on Monday fell 329.60 points, or 1.1%, to close at 29,260.81. That left the Dow
DJIA,
-1.11%

20.5% below its Jan. 4 record finish of 36,799.65. A pullback of 20% or more is widely considered to mark a bear market.

The Dow last fell into a bear market in early 2020 as the COVID-19 pandemic all but shut down the global economy and sparked financial chaos. The Dow dropped 37.1% from its Feb. 12, 2020, peak to its bear-market low on March 23, 2020. It exited the bear — ending 20% above its bear-market low — on March 26, 2020.

According to Dow Jones Market Data, the average Dow bear market sees a peak-to-trough decline of 35.5% and a median decline of 35.9%.

Dow Jones Market Data

Monday marked the 182nd trading day since the Dow’s Jan. 4 peak. On average, past bear markets have taken 133 trading days to fall from their high to enter bear status, or a median of 114 trading days, according to Dow Jones Market Data. To reach bear-market lows, on average it’s taken 272 trading days from the recent high, or a median of 197 trading days.

The S&P 500
SPX,
-1.03%

confirmed its entry into a bear market in June, falling more than 20% from its Jan. 3 record. The large-cap benchmark on Monday fell 38.19 points, or 1%, to close at 3,655.04, taking out its previous 2022 closing low set on June 16, for its lowest close since Dec. 14, 2020.

Read: The stock market could be on the verge of a ‘tradeable’ rebound, according to a key technical indicator

According to Dow Jones Market Data going back to 1950, the average and median returns for the Dow were negative in the week after entering a bear market, while average and median returns for periods up to one year later were positive.

The table below offers a more detailed look at performance going back to 1900:

Dow Jones Market Data

Also see: Surging U.S. dollar is creating an ‘untenable situation’ for the stock market, warns Morgan Stanley’s Wilson

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