As the weakness in equities continues, we wanted to provide an update on where the major averages stand relative to their pre-COVID highs in February 2020. In the case of the S&P 500 and Nasdaq, they’re both still up, but the gains are quickly fading. It has now been just about two and a half years since the pre-COVID high for the S&P 500, and from that peak to this morning, the S&P 500 is up just 5.5% and the Nasdaq is up 5.6%.  On an annualized basis, that works out to less than 2.5%. What’s that phrase people kept saying about irrational moves in stock prices?

As if equity market returns relative to the pre-COVID high weren’t pedestrian enough, keep in mind that once you take the impact of inflation into account, investors are actually now solidly in the red.  The charts below show the performance of the S&P 500 and Nasdaq on an inflation-adjusted basis by adjusting historical prices based on headline CPI. After adjustments, the S&P 500 and Nasdaq are both down 7.7% from their February 2020 highs.  As bad as the investing backdrop has been for equities, long-term US Treasuries have fared much worse than that.  On a nominal basis, long-term US Treasuries have declined 28%, and after adjusting for inflation, the declines have been well over 30%. Click here to learn more about Bespoke’s premium stock market research service.