Now that the S&P 500 is officially in bear territory, the Fed indicates an absolute commitment to tackling inflation, itself at a 40-year high, and everyone is getting accustomed to the idea of a recession, investors want to know where will the bottom of this market be.

Société Générale did an in depth study of 56 crisis periods of US stock market corrections that occurred in the last 150 years, specifically looking at sell-offs that dropped the S&P 500 more than 10%.

The French Bank found that among 30 bear markets since 1870, it would indicate that this market should bottom out some time in the next six months at between 34% and 40% off its peak in January 2022.

Solomon Tadesse, SocGen’s head of equity quant research for North America, said US equities would likely decline further as the Fed tightens monetary policy, possibly even leading to stagflation, as growth declines while inflation continues to rise before it is finally tamed.

Tadesse adds that it is important to understand that the current decline of the stock market is a fairly normal process when examined through the prism of history. What was unusual was the speed and degree of the recovery following the Covid-19-triggered low in March of 2020.

Tadesse points out that after bottoming on March 23rd of 2020, the S&P 500 jumped 113% higher due to artificial Fed-supplied liquidity, and artificial emergency public spending programs to counteract the effects of the pandemic. He goes on to add, “The post-Covid market surge now appears highly excessive. That led to an unsustainable bubble which is now deflating.”

The Bank’s analysis concludes that investors can expect more volatility and declines in the market, and that will continue until the Fed feels it has regained control over inflation.