COVID crash: S&P 500 -12.5%, fastest bear market in history

March 2020 compressed a normal-cycle equity drawdown into 22 sessions. The S&P 500 fell from 3380 on February 19 to 2237 on March 23, a 34% decline that remains the fastest bear market in US equity history. COVID-19 pandemic fears accelerated through early March as Italy locked down and cases surged globally. The WHO declared a pandemic March 11. Circuit breakers triggered four times between March 9 and March 18, a post-1987 record.

The Fed responded with unprecedented speed and scale. March 3: emergency 50 bp cut. March 15: emergency 100 bp cut to zero and $700B QE announcement. March 17: Primary Dealer Credit Facility and Commercial Paper Funding Facility. March 19: foreign central bank swap lines expanded. March 23: unlimited QE and corporate credit facilities. The pace and breadth of interventions was without historical precedent.

Congress responded with fiscal support at similar scale. The $2.2T CARES Act signed March 27 provided direct payments, expanded unemployment insurance, PPP small business loans, and corporate support. The combination of monetary and fiscal action arrested the market decline. From the March 23 low, the S&P 500 would gain 18% by month-end and make new all-time highs by August. The month ended with the S&P 500 down 12.5%, a terrible result in isolation but a remarkable recovery from the intra-month low.