March 23, 2021 will be a landmark date for stock investors. Exactly one year ago, the S&P 500 had reached the bottom, after correcting 34% since the start of the COVID-19 bear, on February 19.
Quite a bit has happened in the past 12 months. Today, the Apple Maven recaps the stock market’s unlikely journey back to all-time highs in only six months, and how Apple shares performed during the period.
The COVID-19 correction has been a historic event in the equities market. The fastest 30%-plus decline in history happened in only 22 trading days – see first graph below. Prior to 2020, the quickest selloff of this magnitude had happened during the Great Depression, in 1934.
Interestingly, Apple shares never dipped 30% below their own February 19 levels. The stock rebounded just above the broad market’s floor, despite the latter being more diversified (hence, theoretically less risky). Apple’s decent February-to-March performance may have been a taste of what was to come next: a high-performing stock through the thick of the pandemic and economic crisis.
If the sharp correction caught most investors by surprise, the same can probably be said about the rebound. While it has historically taken the Dow Jones 1,483 trading days to fully recover from a bear market, on average, it took the index only 193 days to do so in 2020.
The S&P 500 reached a new peak even faster: less than five months, or just about 100 trading days. How about Apple? The stock was back to the top by early June, for an astonishing full bear market recovery in about two and a half months. See graph below.
The broad market spike can be largely explained by the massive injection of liquidity in the economic system by the US central bank and federal government. The former pushed short-term rates lower, from 1.6% to zero, in one month flat. The latter issued the first batch of stimulus payments that reached Americans by mid-April 2020.
The other factor is what also explains Apple’s impressive 52% returns since mid-February 2020: the new stay-at-home dynamics benefitted the tech sector, which happens to be the largest chunk of the S&P 500 and Nasdaq indices. Markets that are not as tech-heavy, such as Japan’s Nikkei 225 and the Russell 2000, remained under water until November.
Do you think that Apple’s dizzying rebound from the bottom of the COVID-19 crisis was justified? Leave your opinion below, while the poll is still open:
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The graphs used in this report were provided by Stock Rover. I have been impressed with the breadth and depth of information on markets, stocks and ETFs that this platform provides. Stock Rover also helps to set up detailed filters, track custom portfolios and measure their performance relative to a number of benchmarks.
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(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting The Apple Maven)