Capital Markets Summer 2022: Revealing Recession Patterns

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Dissecting Drawdowns What’s Priced In?

• Some areas of the stock market are discounting a recession more than others, based on historical drawdowns ‒ Small caps and growth stocks seem to be pricing in a recession more than other areas of the equity market

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Average Stock Drawdowns

Recession Average Current

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-32%

-37%

-43%

-46%

V

-49%

-49%

-50%

-51%

-57%

-59%

S&P 500

Russell 1000

Russell 2000

Russell 1000 Growth

Nasdaq Composite

Source: J.P. Morgan. As of June 2022. Based on 12-month drawdowns. Recession average uses past four recessions.

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