The Anatomy Of A Stock Market Pullback

From Goldman’s latest Weekly Kickstart note, an interesting look at pullbacks (such as the one we’re seeing now) over the last 8 years (of which there have been 13).

The recent 5% decline is consistent with the 13 sell-offs of at least 5% during the past eight years. The S&P 500 had seven dips greater than 5% during the bull market of 2003-07 and six 5% pullbacks since the market bottomed in March 2009. The sell-offs were similar in magnitude with more than half  between 5% and 6% before rallies began that lifted the index to a new high. The only double-digit price drop occurred during spring 2010 when the S&P 500 fell by 16% before bottoming in July at 1023 at 12.0x our forward EPS estimate. The median P/E contraction during the pullbacks equaled 8.8%. The current pullback reflects a 6% P/E compression.

Here’s the table of each one:


Photo: Goldman Sachs

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