The COVID-19 pandemic triggered the fastest bear-market decline in U.S. stock-market history in 2020.
The S&P 500 entered a bear market on March 12, 2020, after fears about the virus, business shutdowns, travel restrictions, and a sharp economic contraction drove heavy selling. From its February 19 record close to its March 23 low, the index fell about 34% in just over a month.
The Federal Reserve cut interest rates, restarted large-scale asset purchases, and introduced emergency lending programs. Governments also approved major fiscal support. These measures, together with improving investor expectations and vaccine development, helped markets rebound rapidly later in 2020.
The market crash and the economic recession were related but not identical. Stock prices can anticipate future conditions, while employment, output, and business activity respond over different time periods. The episode also showed that an outside public-health shock can produce a financial crisis without beginning in the banking system.