US share rout — scary, but we’ve been here before

If the sell-off that has been battering US investors for nine days feels like the worst thing ever, it’s not. Nine times since the bull market began in 2009 have US equities experienced stretches as gruesome as this; each time the end of the world was averted. Here’s a quick walk down memory lane.

January 2016

Concern about an economic slowdown and mounting debt in China’s economy sent the S&P 500 Index down 11 per cent over the course of three weeks. There were 13 days when the market lost at least 1 per cent, with bear market anxieties igniting on February 11 when stocks hit a 22-month low. Then it was over, with the S&P 500 advancing 11 per cent over the next month. By mid-April, all of the January losses were gone.

August 2015

Blame the world’s second-largest economy for this one, as well. Angst over China’s shock devaluation of the yuan and a rout in Asian equities triggered a 1000-point slump in the Dow Jones Industrial Average on August 24. Greece’s debt crisis soured sentiment further. The S&P lost 11 per cent over the course of six sessions only to wipe out the losses in the next two months.

October 2014

The spread of the Ebola virus, concern about the end of quantitative easing and tensions in the Middle East triggered a 460-point rout in the Dow average on October 15, widening a sell-off that started a week earlier to 5 per cent. The rout faded as quickly, and the Dow recouped all the losses in the next two weeks even as a doctor in New York tested positive for the virus.

January 2014

A rout in emerging markets stocks and currencies triggered a 3.6 per cent slide in January, the worst monthly performance since 2012. The sell-off wasn’t abrupt; on just three days did stocks fall more than 1 percent over the course of the month. A 4.3 per cent advance in the S&P 500 in February was the start of a five-month streak of gains.

October-November 2012

Uncertainty leading up to the 2012 election and a weak jobless claims report were behind a 7.1 per cent decline through October and November of 2012. The S&P fell 7.1 per cent between October 18 and November 15, including 5 drops of more than 1 per cent. Eleven weeks later it was over and the benchmark climbed back above its level.

March-June 2012

US Federal Reserve minutes showing the central bank would hold off more easing unless US economic expansion faltered were behind a nearly 10 per cent decline from April to June of 2012. The S&P fell 9.9 per cent between April 2 and June 4, including nine drops of more than 1 per cent. About five months later it was over and the benchmark recouped its losses.

July-August 2011

The US government was stripped of its pristine credit rating after Congress played chicken with the debt ceiling. A lacklustre jobs report didn’t help. The S&P 500 fell 17 per cent between July 7 and August 8, including five drops of more than 1 per cent and two of more than 4 per cent. About seven months later it was over and the benchmark climbed back above its level.

2010

There were two additional drawdowns in 2010, an 8 per cent pullback that began in January and was over by the end of the next month, and a 16 per cent slide that started in April and didn’t end until July. The infamous Flash Crash, on May 6, 2010, occurred in that period.