Anniversaries of major financial events often offer a quick lens into the short-term thinking that shapes markets. On Thursday, September 15, we marked fourteen years since the Lehman Brothers bankruptcy, an event that pushed the financial system to the brink and helped ignite what would become the 2009 global recession. Governments injected capital and central banks supplied liquidity, actions that cushioned the worst blows. By 2013, economies around the world, including Spain, were entering a new phase of growth that lasted until the pandemic struck in March 2020. This period faced new headwinds and a temporary market pullback, one that endured until the crisis expanded with the pandemic and later the war in Ukraine.
How did stock markets respond to these shocks, and how are they behaving today? What can be anticipated in the longer term? For context, this discussion uses the S&P 500 index as a benchmark, representing the 500 largest U.S. companies by market capitalization.
In the months leading up to Lehman’s bankruptcy, the S&P 500 hovered around 1,300, well below its late-2007 peak of 1,570. After September 15, the index plunged as global authorities grappled with a systemic crisis. It bottomed near 700 in March 2009, a drop of roughly 46 percent in half a year. At that moment, the direction of the market was unclear, with clouds darkening the horizon. In the United States, Barack Obama had just begun his presidency, while in Europe Angela Merkel emerged as a steadfast leader. Mario Draghi, who would later be celebrated as a euro savior, was then president of the Bank of Italy.
Over time, the market recovered, aided by renewed investor confidence and tech innovation. Apple ascended to become the most valuable company on the planet. From the 700-point low in March 2009, the S&P 500 climbed past 3,400 by January 2020, even as the early signs of a new health crisis emerged in Wuhan. The first weeks of March were tumultuous as many economies implemented lockdowns to curb the spread of infection. The stock market rally that followed was tested by the pandemic, and in a matter of days the S&P 500 fell about 33 percent, dropping to roughly 2,300 points. The mood shifted from exuberance to caution, and the market faced a fresh test of resilience.
Yet, as in 2009, the decline proved temporary. In March 2020 the index found a bottom and began a steady ascent once vaccines and containment measures gained traction. By year-end, a global economic slowdown had given way to a powerful equity rally, with major indices reaching new highs. Tech shares were at the forefront of that surge, and the prospect of a new era of digital innovation fueled optimism. For many investors, the period resembled the sentiment of the late 1990s, sometimes referred to as a modern roaring decade. By December 21, 2021, the S&P 500 stood at a record 4,766, underscoring how money chases growth and how quickly wealth can accumulate for those who timed the rebound well. Those who invested 10,000 euros in March 2009 could have seen a substantial gain by the end of the following year, a reminder of long-horizon compounding at work [Citation: market history].
Then came geopolitical tensions and renewed energy anxieties. On February 24, 2022, a new crisis unfolded, marked by war and energy volatility. Inflation reappeared with a vengeance and interest rates moved higher. How did the S&P 500 respond? It dipped about 18 percent from its all-time high and hovered around 3,900 points for a period. Even with intermittent improvements, the downside risk remained more muted than in earlier crises, and the hardest hit segment shifted toward technology stocks. In some cases, investors captured significant gains as markets frayed and opportunities appeared in volatile conditions [Citation: market event].
Is the bottom behind the index? The simple answer is no one knows. Unlike the 2008 crisis or the initial pandemic shock — which had clear, structural drivers — the current environment is shaped by a broad mix of factors. Predicting the next move involves weighing geopolitical risks, energy supply dynamics, inflation trajectories, and central bank policy. Variables are numerous, and sentiment often carries more weight than models in the near term. For those who view outcomes with optimism, the argument is straightforward: sooner or later, the cycle turns and recovery resumes. History provides a reference point, but it does not guarantee the future [Citation: economic history].