Stock market acting like it did before the recession of 1969, JPMorgan strategist finds - MarketWatch

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SPX -1.16% TMUBMUSD02Y 4.462% TMUBMUSD10Y 3.716%

Bryan Adams, the Canadian singer, famously reminisced about the summer of 1969, and now, investment analysts are as well.

Nikolaos Panigirtzoglou, a strategist at JPMorgan, finds the recession that began in 1969 is the most consistent with the pre-recession stock market pattern of the past year.

Like the one predicted by many economists for this year, the 1969 recession was mild, at least as far as corporate earnings were concerned. Earnings per share for S&P 500 companies fell 13% peak-to-trough during that recession.

Another similarity between now and then is the steep drop in the stock market. In the 1969 recession, the S&P 500 index SPX, -1.16% slumped 34% from peak to trough, and by around 20% before the recession started. Already, the market is down about 20% in the past year from its peak before any recession has started.

The trajectory of the slope of the U.S. Treasury yield curve, as defined by the gap between 2-year TMUBMUSD02Y, 4.462% and 10-year TMUBMUSD10Y, 3.716% yields, also is very similar to that of 1969 before the recession started.

So what does this mean?

“Using the 1969 U.S. recession as a guide, the picture we get is of continued equity market declines up to six months after the start of the recession, but a quick recovery after then,” says Panigirtzoglou.

Value will once again outperform growth, these investing-newsletter writers say.

Steven Goldstein is based in London and responsible for MarketWatch's coverage of financial markets in Europe, with a particular focus on global macro and commodities. Previously, he was Washington bureau chief, directing MarketWatch's economic, political and regulatory coverage. Follow Steve on Twitter: @MKTWgoldstein.

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