Comparing the Current Market Downturn to the COVID Crash

A sector-based analysis

The COVID crash in 2020 was the 6th worst S&P 500 downturn since 1929, while the current downturn is 15th in the ranking…so far at least:

Beyond just the obvious that one crash was worse than the other, we can look under the surface at the various sectors of the market to see how each area is affected differently:

In the current downturn, communications, consumer discretionary, and technology are getting hit the hardest. In the COVID crash, those sectors got hit pretty hard nominally but were actually hit less compared to other sectors, like energy and financials.

In the COVID crash, there was no place to hide. Staples and utilities, which tend to be “safer” areas to invest, got crushed. In the current downturn, they are holding up a lot better and are pretty much flat.

The biggest difference, obviously, is energy. It was the worst performer of the COVID crash. Now? It is actually up. Way up.

The important lesson here is that no downturn (or market environment) is going to look the same. We have to dig under the surface to see the behavior of individual sectors, industries, and companies to understand what is happening.

All of that work usually gets bubbled up into one metric for an entire index. But, the better we understand what’s happening in detail, the better we can prepare for what might come next!