What Are the Leading Recession Indicators?
The yield curve, jobless claims, factory surveys, building permits and credit spreads: what each one measures, how reliable it has been, and why none of them should be used alone.
ResourcesGuide
What Happens to Stocks During a Recession?
How far the S&P 500 fell in each US recession since 1957, when stocks tended to bottom, which sectors fell most, and what held up, with sources for every number.
Key takeaways
- Stocks fell in every US recession since the S&P 500 began in 1957. Across 10 recessions the average peak-to-trough decline was 31%, from 14% (1960) to 57% (2007–09), per Truist data.
- Stocks usually bottom before the recession ends. In past recessions the S&P 500 typically bottomed about five months before GDP did.
- Not every bear market comes with a recession: SPY fell 25.4% in 2022 (Exent’s data) and the NBER dated no recession.
- Sectors fall unevenly. In the 2007–09 crisis the median large financial stock fell 76%, against 42% for consumer defensive stocks (Exent’s data, as of Sep 30, 2026).
Market risk reading, cross‑asset context and an events calendar: see Exent →
How much do stocks fall in a recession?
In the 10 US recessions since the S&P 500 index was created in 1957, the index fell 31% on average from peak to trough. The range was wide: from 14% around the 1960 recession to 57% in the global financial crisis. The table uses Truist Advisory Services data published by The Motley Fool (March 2025).
| Recession began | S&P 500 peak-to-trough decline |
|---|---|
| August 1957 | −21% |
| April 1960 | −14% |
| December 1969 | −36% |
| November 1973 | −48% |
| January 1980 | −17% |
| July 1981 | −27% |
| July 1990 | −20% |
| March 2001 | −37% |
| December 2007 | −57% |
| February 2020 | −34% |
| Average of 10 recessions | −31% |
Recession start dates follow the National Bureau of Economic Research (NBER), which dates US business cycles. The deepest declines came when a recession combined with a financial shock or an earlier bubble: 1973–74, the dot-com bust around 2001 and the 2007–09 banking crisis. For the full list of market crashes, see the history of stock market crashes.
When do stocks bottom in a recession?
Stocks usually bottom while the recession is still under way, often months before it ends. The same Truist-based analysis found that the S&P 500 typically bottomed about five months before GDP. Investors price in the recovery before it shows up in the data.
The official call comes much later. The NBER announced on July 19, 2021 that the 2020 recession had ended in April 2020, more than a year after stocks had started recovering. Anyone waiting for official confirmation that a recession is over would have missed much of the rebound.
Which stocks fall most in a recession?
Cyclical and leveraged businesses fall most; companies that sell everyday necessities fall least. Exent’s crash study of the largest US stocks shows the pattern in the two most recent recessions. In the 2007–09 crisis, 349 large stocks had data; their median decline was 61.6%, against 56.5% for SPY, and 220 of them fell more than the index. In the COVID crash, the median decline of 440 large stocks was 40.8%, against 34.1% for SPY.
| Sector (median large stock) | 2007–09 financial crisis | COVID crash, Feb–Mar 2020 |
|---|---|---|
| Financial services | −76.0% | −44.8% |
| Energy | −68.7% | −61.6% |
| Consumer cyclical | −66.3% | −49.5% |
| Technology | −66.2% | −36.9% |
| Industrials | −59.8% | −42.6% |
| Healthcare | −57.8% | −32.1% |
| Utilities | −51.1% | −37.1% |
| Consumer defensive | −42.3% | −29.3% |
Source: Exent’s data, as of Sep 30, 2026, peak-to-trough declines within each episode. Each recession hits its own weak spot: banks in 2008, energy and travel in 2020. Even the mildest large stocks of 2008, such as McDonald’s (−22.9%) and Walmart (−26.5%), still fell by a fifth or more. Past declines say nothing certain about the next recession.
What holds up when stocks fall in a recession?
Historically, Treasury bills and intermediate Treasury bonds fell least, with gold and defensive sectors in between. The table shows the largest decline of each fund within each episode, from the same data. 2022 is included because it shows the exception: in an inflation-driven selloff, bonds fell with stocks.
| Fund | 2007–09 crisis | COVID crash 2020 | 2022 bear market |
|---|---|---|---|
| SPY (S&P 500) | −56.5% | −34.1% | −25.4% |
| XLU (utilities) | −48.8% | −36.2% | −21.3% |
| XLV (healthcare) | −40.6% | −28.3% | −16.1% |
| XLP (consumer staples) | −34.2% | −24.8% | −17.5% |
| GLD (gold) | −29.4% | −12.5% | −21.0% |
| TLT (20+ year Treasuries) | −16.7% | −15.7% | −31.1% |
| IEF (7–10 year Treasuries) | −7.1% | −4.7% | −17.0% |
| BIL (1–3 month T-bills) | −1.1% | −0.1% | −0.2% |
Can stocks fall without a recession?
Yes, and it happens often. The NBER’s chronology lists no recession after the one that ended in April 2020, yet in the same data SPY fell 25.4% in the 2022 inflation bear market, 20.2% in the 2018 trade-war selloff and 19.0% in the 2025 tariff selloff. Stocks react to expected profits and interest rates, and those can change sharply without the economy shrinking.
The reverse also holds: by the time a recession is official, stocks have often already fallen a long way. That is one reason market timing around recessions is so hard. For the signals economists watch, see leading recession indicators.
How long do recessions last?
Recent US recessions have been short compared with the expansions between them. The NBER dates the 2007–09 recession from a December 2007 peak to a June 2009 trough, and the 2020 recession from February to April 2020, the shortest on record. The market’s recovery does not follow the same clock: some recoveries took years, others months. See how long markets take to recover from a crash.
How can investors prepare for a recession?
The most useful preparation happens before the downturn, while decisions can be made calmly. Investors often focus on a few checks:
- Replay your current holdings through 2008 and 2020 to see the loss in dollars, not just percent.
- Find the positions that drive most of that loss, usually the largest cyclical or leveraged ones.
- Keep enough cash or short-term bonds for near-term spending so you are not forced to sell low.
- Check whether your “diversifiers” actually held up in past downturns, including 2022.
- Decide in advance what you would do at −20% and −35%, and write it down.
For a step-by-step version, follow the recession portfolio checklist or try the crash test.
How to follow a slowdown with Exent
- Market Intelligence gives a daily read of the market with cited sources, plus an events calendar for jobs, inflation and Fed dates.
- Cross‑asset signals show how stocks, bonds, gold and the dollar are moving relative to each other.
- Portfolio Analysis replays your own holdings through 2008, 2020 and 2022 and shows the loss in dollars and which positions drive it.
Frequently asked questions
In every US recession since the S&P 500 began in 1957, the index fell from peak to trough, by 14% to 57% according to Truist data. The size of the fall varied a lot from one recession to the next.
SPY, the S&P 500 ETF, fell 56.5% from peak to trough during the 2007–09 financial crisis, in Exent’s data. Large financial stocks fell a median 76%.
Recessions are hard to call in advance, and stocks usually bottom before the recession ends, so selling and buying back on time is difficult. Many investors instead size their risk in advance so they can hold through a downturn.
Historically, consumer defensive, healthcare and utility stocks fell less than the market, and short-term Treasuries held their value. They still fell in most recessions; they fell less.
In past US recessions the market did recover, usually starting before the recession officially ended. How long it took varied from months to years.
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Educational content, not investment advice. Examples are illustrative; past performance does not guarantee future results.