Despite the bounce, the S&P 500 remains close to the bear market. Here’s the number that counts

The latest bull market for US stocks remains on the verge of expiration, with the benchmark S&P 500 index just shy of the threshold marking bear territory.

The S&P 500SPX,
it ended 0.1% lower at 3,930.08 on Wednesday, after falling as low as 3,858.87 at its session low. That was the index’s lowest close since March 25, 2021 and left it 18.1% below its record close in early January. A Friday bounce for stocks saw the S&P 500 nearly halve its decline for the week to 2.4%, closing at 4023.89.

In a graph: Stock market “lows” are yet to come as investors have yet to capitulate, says B. de A.

A finish below 3,837.25 would mark a 20% drop, according to Dow Jones Market Data, which meets the widely used technical definition of a bear market.

The S&P 500 entered correction territory, down 10% from a recent high last month, its second such foray this year. A rough April for stocks has been followed by an ugly May, with stocks suffering as investors continue to dump mega-cap tech stocks and other high-flying pandemic darlings amid investor jitters over inflation that remains historically high and a Federal Reserve that is moving to rapidly raise interest rates and otherwise tighten monetary policy in an effort to rein in those price pressures.

Watch: Why are stocks on the brink of a bear market? Stagflation, the Federal Reserve and what investors need to know

Hopes that an eagerly awaited reading on April consumer price inflation on Wednesday will show inflation has peaked and help stabilize the ship offered little comfort to nervous investors. Although the annual pace of inflation slowed to 8.3% from 8.5% in March, it was still stronger than the 8.1% reading expected by economists. Also, a reading of the core CPI, which excludes food and energy, showed an unexpected monthly increase.

Read: What’s next for stocks and bonds after inflation data fails to provide a “decisive moment”?

Through Thursday, the S&P 500 was down 4.9% in May, while the tech-heavy Nasdaq Composite COMP,
which entered a bear market earlier this year, had fallen 7.8% and the top-tier Dow Jones Industrial Average DJIA,
down about 3.8%.

Dow Jones Market Data

The S&P 500 ended its last bull market on March 12, 2020, when the outbreak of the COVID-19 pandemic sent stocks tumbling. The pandemic-inspired bear market bottom came on March 23, 2020, with the S&P 500 posting a 33.9% drop from its bull market peak on February 19, 2020.

Based on figures going back to 1929, the average bear market sees a bear market peak-to-trough decline of 33.5% and a median decline of 33.2%, according to Dow Jones Market Data. On average, the S&P 500 took 80 trading days to bottom out after entering a bear market, and a median of 52 trading days, the data showed.

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