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S&P 500: What Happens if We Enter a Full-Blown Recession?

www.investing.com/analysis/sp-500-what-happens-if-we-enter-a-fullblown-recession-200634647
S&P 500: What Happens if We Enter a Full-Blown Recession?
By Francesco Casarella/Investing.com   |  Jan 24, 2023 06:16AM ET
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  • Since the beginning of the year, the stock market has surprised many investors with a significant recovery
  • Yet, investors remain wary of a pullback in equities, fearing a fake rebound and a possible recession
  • Stocks have generally done well during times of high unemployment

Indexes around the world have rebounded strongly since the start of the year:

Also, from a technical standpoint, it is for the first time since the bear market's start we had a close above the descending trendline that until now has blocked any attempt at recovery.

S&P 500 Daily Chart
S&P 500 Daily Chart

Despite all the positive indicators, many investors remain skeptical and fearful because the unexpected collapse burned them in 2022. Naturally, they do not trust the current rally because they fear it is a fake rebound.

However, as I always say, if you invest long-term, it shouldn't worry you if it goes back down. That's how markets behave.

I believe that those who cannot understand what they are buying simply should not buy. For them, Eni (BIT:ENI) may be a better choice for now.

An interesting analysis of how stocks have fared in times of recession historically showed that stocks have risen during times of rising unemployment.

Stock Returns Vs. Unemployment Rate
Stock Returns Vs. Unemployment Rate

So if someone tells you, "be careful investing in stocks, if a recession comes, the markets will fall," they simply do not know what they are talking about.

We are surrounded by talk, incompetence, and people who profess to be experts on this or that.

The truth is no one knows anything about the future, and people try and sell certainty in an uncertain and fickle environment. Instead, learn to live with uncertainty and stay focused on what you can control. Sound financial planning is the first step when approaching markets.

Disclosure: The author is long on ENI and the S&P 500.

This article is written for informational purposes only; it does not constitute a solicitation, offer, advice, counsel, or recommendation to invest as such, it is not intended to incentivize the purchase of assets in any way. I would like to remind you that any type of asset is evaluated from multiple points of view and is highly risky and therefore, any investment decision and the associated risk remains with the investor.

S&P 500: What Happens if We Enter a Full-Blown Recession?
 

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S&P 500: What Happens if We Enter a Full-Blown Recession?

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Comments (24)
George Steven
George Steven Jan 26, 2023 7:00PM ET
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stock Markets boomed in 2009. Boomed 2020-2021 after drop in early 2020. Stock Market is a forward indicator of the economy
Hank Williams
Hank Williams Jan 26, 2023 2:20PM ET
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Based on recent trade it goes straight up.
waseem arshad
waseem arshad Jan 26, 2023 4:37AM ET
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You are absolutely right and I fully agreed with your approach and article
Matt Kay
Matt Kay Jan 25, 2023 3:15PM ET
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not if but when. meaning around autumn time
Roman Dardashti
Roman Dardashti Jan 25, 2023 7:01AM ET
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Here is a graph showing the correlation of unemployment to stock returns that contradicts this wishful thinking report of carefully selected time periods. https://www.cabotwealth.com/daily/stock-market/unemployment-stock-market-correlation-one-chart
Jimmy Doodoo
JimmyD Jan 25, 2023 12:20AM ET
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Spam
Surf City
Surf City Jan 24, 2023 11:33PM ET
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Zzzzz
Erikke Evans
Erikke Jan 24, 2023 7:00PM ET
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Periods of rising unemployment and recession aren't necessarily correlated.
First Last
First Last Jan 24, 2023 4:30PM ET
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"Since the beginning of the year, the stock market has surprised many investors with a significant recovery"  --  not me.  I was posting here in late Dec 2022 reminding people that the market bottomed around xmas of 2018.
First Last
First Last Jan 24, 2023 4:30PM ET
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I'm not sure why 3 people are disagreeing w/ me that I wasn't surprised.
jason xx
jason xx Jan 24, 2023 2:58PM ET
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Agree about perception. Market declines are nothing but buying opportunities
 
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