The sudden shock: the S&P 500 crash in March 2020
The American stock market experienced in February-March 2020 a reversal of rare violence and speed, caused by the COVID-19 pandemic. The S&P 500, which peaked at 3,386 points on February 19, 2020, plunged by -34% in only 33 stock market sessions, reaching a low of 2,191 points on March 23. This decline is not only one of the most brutal in modern history, but also the fastest ever recorded at this amplitude (SPIVA U.S. Year-End 2020 Report, S&P Dow Jones Indices).
To put this shock into perspective, the 2020 drop was sudden but concentrated over a month and a half, whereas previous major crises spread their decline over several quarters or even years. The market thus erased nearly a third of its value in record time, reflecting panic in the face of unprecedented health, economic, and political uncertainty.
A lightning recovery: 148 days to erase the drop
The post-crash recovery was just as spectacular. While previous crises left a bitter taste for years, the S&P 500 erased its March losses by August 18, 2020, just 148 days after the low. This timeframe is an absolute record: the full recovery after the 1929 stock market crash took 25 years, that of the 2000 internet bubble about 7 years, and that of the 2008 financial crisis nearly 4 years (Fama-French 1993, "The Cross-Section of Expected Stock Returns"; Bloomberg, historical data).
This rapid rebound surprised many investors and analysts, and fueled a massive FOMO (Fear Of Missing Out) phenomenon in the second half of 2020, especially on technology stocks.