Was there a bear market in 1973 to 1974?
The Bear Market of 1973-1974: The Oil Shock
In the 694 days between 11 January 1973 and 6 December 1974, the New York Stock Exchange's Dow Jones Industrial Average benchmark suffered the seventh-worst bear market in its history, losing over 45% of its value. 1972 had been a good year for the DJIA, with gains of 15% in the twelve months.
Oil Embargo, 1973–1974. During the 1973 Arab-Israeli War, Arab members of the Organization of Petroleum Exporting Countries (OPEC) imposed an embargo against the United States in retaliation for the U.S. decision to re-supply the Israeli military and to gain leverage in the post-war peace negotiations.
To date, the deepest, most destructive, and most prolonged bear market was the 1929-1932 slump that was accompanied by the Great Depression.
The early 1970s saw the U.S. beset with multiple challenges, including an energy crisis, the impending loss of the war in Vietnam, the Watergate scandal, and the resignation of President Richard Nixon. The stock market fell nearly 52%, contributing to a severe recession that lasted from 1974 to 1975.
| Bear Market Period | Duration | Total S&P 500 Decline |
|---|---|---|
| January 1973 to October 1974 | 21 months | -48% |
| November 1980 to August 1982 | 21 months | -27% |
| August 1987 to December 1987 | 4 months | -34% |
| July 1990 to October 1990 | 3 months | -20% |
The emergence of newly industrialized countries increased competition in the metal industry, triggering a steel crisis, where industrial core areas in North America and Europe were forced to re-structure. The 1973–74 stock market crash made the recession evident.
1973 was an extremely eventful year in history. Some memorable 1973 headlines include the official end of U.S. involvement in the Vietnam War and the opening of the World Trade Center in New York City. Other remarkable 1973 newspaper articles cover topics such as the Roe v.
Johnson, the U.S. Supreme Court's decision on Roe v. Wade, the signing of the Paris Peace Accords and end of the United States participation in the Vietnam War, the end of the post-World War II boom and the beginning of the first of a series of recessions that continued over the next decade, and the first oil crisis.
August 8 – Watergate scandal: President Nixon announces his resignation (effective August 9). August 9 – Richard Nixon becomes the first president of the United States to resign from office, an action taken to avoid being removed by impeachment and conviction in response to his role in the Watergate scandal.
What was the longest bear market in history?
The average length of a bear market is 289 days, or about 9.6 months. That's significantly shorter than the average length of a bull market, which is 965 days or 2.6 years. dot-com crash in March 2000 is technically the longest (a drop of 19.9% in 1990 nearly derailed that bull, but just missed the bear threshold).
The ongoing Treasury rout ranks as the deepest bond bear market in the 247-year history of the US, according to Bank of America.
The duration of bear markets can vary, but on average, they last approximately 289 days, equivalent to around nine and a half months. It's important to note that there's no way to predict the timing of a bear market with complete certainty, and history shows that the average bear market length can vary significantly.
When the stock market declines, the market value of your stock investment can decline as well. However, because you still own your shares (if you didn't sell them), that value can move back into positive territory when the market changes direction and heads back up. So, you may lose value, but that can be temporary.
| ASSET | YEAR | % RETURN |
|---|---|---|
| Raytheon Technologies (RTX) | 1974 | 47.75% |
| Matson (MATX) | 1974 | 45.09% |
| Boeing (BA) | 1974 | 33.08% |
| International Flavors & Fragrances (IFF) | 1974 | 13.79% |
The current bull market started in October 2022, when the S&P 500 reached its most recent low. Since then, the index has swelled about 35 percent.
Economic growth actually accelerated above its 10-year average in 2023. That resilience, coupled with a fascination about artificial intelligence (AI), changed investors' collective mood. The S&P 500 soared throughout the year and finally reached a new high in January 2024, making the new bull market official.
Watch for 20%: Market cycles are measured from peak to trough, so a stock index officially reaches bear territory when the closing price drops at least 20% from its most recent high (whereas a correction is a drop of 10%-19.9%). A new bull market begins when the closing price gains 20% from its low.
Despite an uncertain economic outlook, the S&P 500 has rallied to new all-time highs in 2024 driven by remarkably strong underlying economic fundamentals. S&P 500 companies have reported their second consecutive quarter of year-over-year earnings growth in the fourth quarter.
THE RECESSION of 1973-75 was the most severe economic contraction in the postwar era. By the first quarter of 1975, real gross national product had declined nearly 7 percent from its 1973 peak, about twice the decline in real GNP from peak to trough in 1957-58, the most severe previous postwar recession.
What was the worst recession in the U.S. history?
The last time the U.S. experienced a recession was in 2020. But that was a relatively short recession. The biggest recession in U.S. history sparked the Great Depression, between 1929 and 1933, though the Great Recession (2007-2009) was the worst in modern times.
The dramatic acceleration of inflation between 1972 and 1974 can be traced mainly to three "shocks": rising food prices, rising energy prices, and the end of the Nixon wage-price controls program. Each of these can be conceptualized as requiring rapid adjustments of some relative prices.
In October 1973, an OPEC oil embargo triggered an energy crisis as Americans queued in long gas lines. In November, NASA launched the Mariner 10 Mercury probe spacecraft. At the end of the year, the Endangered Species Act of 1973 was passed to protect critically imperiled species from extinction.
1973 was the year the Xerox Alto, the first cell phone call, TCP, Ethernet, and fiber optics were created. Together, all of those technologies have, in combination, informed the world we're in today.
Congress passed the War Powers Resolution of 1973, intending to limit the President's authority to wage war and reasserted its authority over foreign wars. President Nixon vetoed the bill. However, Congress overrode his veto, and the resolution became law following the U.S. withdrawal from Vietnam in early 1973.
