History suggests the S&P 500 will fall below its October 2022 bear market lows if the US falls into recession. Or does it? It may not be that simple, says Ned Davis Research’s Ed Clissold.

Yes, a bear market has never ended before the start of a recession. Most economists say the US is not in recession but that it’s likely, suggesting new lows are ahead. Additionally, says Clissold, the Federal Reserve has repeatedly indicated it is willing to push the economy into recession to curb inflation.

Bear markets end a median of 14 months after the last rate hike. With the Fed still raising rates, this suggests the bear market could continue “well into 2024″. However, there is a “but”, in that markets started pricing in rate hikes much earlier than normal. Usually, bear markets start a median of seven months after the first rate increase, but the current one started two months before the first hike.

Markets were even further in advance of the economy, says Clissold. Historically, bear markets start a median of six months before recessions. With a recession unlikely before late 2023 or 2024, there is “no precedent for staying in a bear that long”. The data, then, is mixed, but Clissold continues to “lean bullish” for now.