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The 2020 Pandemic Crash

How the COVID-19 pandemic took the S&P 500 down 34% in about a month in early 2020, what happened to jobs, volatility, and the bond market, how the Federal Reserve and Congress responded on an unprecedented scale, why the recession was the shortest on record, and what the speed of the recovery meant for investors who sold.

Lesson 11 of 14 · 5 min read · Advanced · Members · Last reviewed October 2026

The short version

The S&P 500 peaked on February 19, 2020, and fell 34% by March 23 as the pandemic shut down much of the economy. On March 16 alone it fell 12%, and the VIX volatility index closed at 82.69. Unemployment jumped from 3.5% in February to 14.8% in April, and payrolls fell by about 21.9 million jobs in two months. The Fed cut rates to near zero on March 15, promised to buy Treasuries and mortgage securities "in the amounts needed" on March 23, and launched lending programs for companies and cities; Congress passed the CARES Act on March 27. The recession lasted only two months, the shortest on record, and the S&P 500 regained its peak on August 18, 2020, ending the year up 18% with dividends.

By the end of this lesson, you'll be able to

  • Describe how fast stocks, jobs, and markets fell in February and March 2020
  • Explain the Federal Reserve's and Congress's response and why it was so large and fast
  • Explain what the quick recovery meant for investors who sold during the crash

Why this matters

The 2020 crash was unusual in almost every way: it came from a virus rather than from the financial system, the fall took about a month, and the recovery was nearly as fast. The recession lasted two months, which made it the shortest US recession on record.1 For investors it's the sharpest modern test of whether selling in a panic protects you or costs you.

The fall

The S&P 500 closed at 3,386.15 on February 19, 2020. As the virus spread and much of the economy shut down, it fell 34% in just over a month, to 2,237.40 on March 23. Some single days were brutal: on March 16 it fell 12%.2 The VIX, the market's measure of expected volatility, went from 14.38 on February 19 to a close of 82.69 on March 16.3

The S&P 500's worst days of March 2020
DateCloseChange on the day
Monday, March 92,746.56−7.6%
Thursday, March 122,480.64−9.5%
Monday, March 162,386.13−12.0%

Daily closes of the S&P 500 index, price only.2

The economy fell even faster. The unemployment rate rose from 3.5% in February to 14.8% in April, and payroll employment dropped by about 21.9 million jobs in those two months.45 Investors rushed for safety: the 10-year Treasury yield fell from 1.56% on February 19 to 0.54% on March 9.6 Even the market for Treasuries came under strain, and the Fed began buying them partly to support the smooth functioning of that market.7

The response

Five weeks of policy
DateAction
March 3The Fed cuts its federal funds target by half a point, to 1% to 1.25%.
March 15A Sunday: the Fed cuts to 0% to 0.25% and says it will buy at least $500 billion of Treasuries and $200 billion of mortgage-backed securities.
March 23The Fed drops the limits, promising purchases "in the amounts needed," and announces programs to lend to large companies, support asset-backed lending, and expand help for money market funds and cities.
March 27The CARES Act, passed by Congress two days earlier, is signed into law.

Federal Reserve and US Treasury.87910 The Fed's balance sheet grew from about $4.2 trillion in early March 2020 to about $7.2 trillion by June.11 March 23 turned out to be the market's low.2

The rest of this lesson is for members

Still to come in this lesson: The recovery, the key takeaways, and 2 quiz questions with explanations.

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Notes and sources

  1. National Bureau of Economic Research. Business Cycle Dating Committee Announcement, July 19, 2021. Checked 2026-11-02. Back to text
  2. Federal Reserve Bank of St. Louis (FRED), from S&P Dow Jones Indices. S&P 500 (SP500), daily close, most recent ten years. Checked 2026-11-02. Back to text
  3. Federal Reserve Bank of St. Louis (FRED), from the Chicago Board Options Exchange. CBOE Volatility Index: VIX (VIXCLS), daily close. Checked 2026-11-02. Back to text
  4. Federal Reserve Bank of St. Louis (FRED), from the U.S. Bureau of Labor Statistics. Unemployment Rate (UNRATE), monthly. Checked 2026-11-02. Back to text
  5. Federal Reserve Bank of St. Louis (FRED), from the U.S. Bureau of Labor Statistics. All Employees, Total Nonfarm, seasonally adjusted (PAYEMS) and not seasonally adjusted (PAYNSA), monthly. Checked 2026-11-02. Back to text
  6. Federal Reserve Bank of St. Louis (FRED), from the Board of Governors of the Federal Reserve System. Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity (DGS10), daily. Checked 2026-11-02. Back to text
  7. Board of Governors of the Federal Reserve System. Federal Reserve issues FOMC statement, March 15, 2020. Checked 2026-11-02. Back to text
  8. Board of Governors of the Federal Reserve System. Federal Reserve issues FOMC statement, March 3, 2020. Checked 2026-11-02. Back to text
  9. Board of Governors of the Federal Reserve System. Federal Reserve announces extensive new measures to support the economy, March 23, 2020. Checked 2026-11-02. Back to text
  10. U.S. Department of the Treasury. About the CARES Act and the Consolidated Appropriations Act. Checked 2026-11-02. Back to text
  11. Federal Reserve Bank of St. Louis (FRED), from the Board of Governors of the Federal Reserve System. Assets: Total Assets: Total Assets (Less Eliminations from Consolidation): Wednesday Level (WALCL), weekly. Checked 2026-11-02. Back to text
  12. Aswath Damodaran, NYU Stern School of Business. Historical Returns on Stocks, Bonds and Bills, with annual data through 2025 (updated January 2026). Checked 2026-11-02.
  13. Federal Reserve Bank of St. Louis (FRED), from the U.S. Bureau of Labor Statistics. Consumer Price Index for All Urban Consumers: All Items in U.S. City Average (CPIAUCSL), monthly. Checked 2026-11-02.