Bull market taken to the brink

COVID-19 and collapsing oil prices almost brought the longest-ever bull market to an end Monday nearly 11 years to the day. While Monday's trading fell short of the 20% drawdown mark, pressure from the current environment doesn't mean it won't cross that threshold. Tuesday offered some reprieve as an emergency drop in the Federal Reserve discount rate and help from the U.S. government in the form of a possible stimulus package offered some hope. That hope may be short-lived, however, as efforts to contain the virus' global spread have been porous.

Recovery from previous drawdowns of similar magnitude have been lengthy as investors regained confidence in markets and assets returned to their break-even points, but in this case, it's the onset of the drawdown that is most striking. In 2011 when the Fed hinted it would slow its Treasury purchases and allow interest rates to rise, the index took 109 days to move from peak to trough, or recording a 19.4% decline, and 2018's late-year decline took 64 days to reach a -19.8% decline. The most recent drawdown period took 13 days to develop.

Tuesday's uptick may only have been a slight pause in the decline as more businesses are encouraging employees to stay home and avoid crowded places such as stores, airplanes and other large gathering places.