(Bloomberg) — Consecutive down years are uncommon for US shares, so after this 12 months’s drop, there’s solely a low likelihood they’ll decline once more in 2023. But in the event that they do, historical past exhibits that traders should brace for one more very disagreeable 12 months.

Since 1928, the S&P 500 Index has solely fallen for 2 straight years on 4 events: The Nice Despair, World Struggle II, the Seventies oil disaster and the bursting of the dot-com bubble in the beginning of this century.

Within the benchmark’s nearly 100-year historical past, such events are clear outliers. But once they have occurred, drops within the second 12 months have all the time been deeper than within the first, with a median decline of 24%. That might exceed this 12 months’s slide of about 20% thus far.

Greater than two back-to-back years within the pink are even rarer. The S&P 500 tumbled for 3 straight years from 2000 to 2002 and from 1939 to 1941, whereas the longest dropping streak stays the aftermath of the notorious Wall Avenue crash, when shares fell for 4 years from 1929 to 1932.

To make sure, each fund managers and Wall Avenue strategists forecast a muted restoration for the S&P 500 subsequent 12 months.

“Recession doesn’t need to be doom for equities and markets are likely to backside earlier than a recession begins,” mentioned Manish Singh, chief funding officer at Crossbridge Capital. He believes the S&P 500 noticed its backside in June throughout peak inflation.

–With help from Michael Msika and Man Collins.