1973–74 Oil Crisis and Stagflation Bear Market
January 1973 – October 1974
Duration: 21 months (from Jan 1973 peak)S&P 500 DRAWDOWN
−48%
peak to trough
1973–74 Stagflation at a glance
| Period | January 1973 – October 1974 |
|---|---|
| Duration | 21 months (from Jan 1973 peak) |
| S&P 500 peak to trough | -48% |
| Time to recover prior high | 5 years 9 months for the S&P 500 to regain its January 1973 high in nominal terms (July 1980); in inflation-adjusted terms the loss was not recovered until 1985 |
| Trigger | OPEC oil embargo (October 1973), inflation above 12%, collapse of the Bretton Woods dollar peg, Watergate |
Sources: S&P 500 historical records, Federal Reserve archives, index providers' data. Updated 2026-10-19.
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What Happened
TRIGGER
OPEC oil embargo (October 1973), inflation above 12%, collapse of the Bretton Woods dollar peg, Watergate
The worst US bear market between 1929 and 2008, and the one that broke the rule that stocks and bonds protect each other. After the end of the gold-backed dollar in 1971, the OPEC embargo of October 1973 quadrupled oil prices in months. US inflation hit 12.3% in 1974 while the economy shrank: stagflation. The S&P 500 lost 48% from January 1973 to October 1974, the Nifty Fifty growth stocks fell further, and bonds lost money in real terms for the entire decade. Gold, which had just been freed from its $35 peg, more than doubled.
Key Facts
- 01S&P 500 fell 48% from January 1973 peak to October 1974 trough
- 02Oil price rose from about $3 to nearly $12 a barrel between October 1973 and early 1974
- 03US CPI inflation reached 12.3% in 1974; the Fed funds rate peaked near 13%
- 04US unemployment rose to 9.0% by May 1975
- 05The UK FT 30 index fell 73% from 1972 to December 1974, worse than the US
- 06Gold went from about $65 an ounce in early 1973 to over $180 by the end of 1974
How did each asset class perform during the 1973–74 Stagflation?
Peak-to-trough return of the ETF proxy for each asset class, January 1973 – October 1974. The same numbers power the free stress test.
How did US Equities perform?
| US Tech (QQQ) | -62% |
| US Financials (XLF) | -53% |
| US Cons. Disc. (XLY) | -52% |
| US Total Market (VTI) | -46% |
| US Industrials (XLI) | -44% |
| US Growth (VUG) | -31% |
| US Small Cap (IWM) | -29% |
| US Healthcare (XLV) | -28% |
| US Cons. Staples (XLP) | -18% |
| US Value (VTV) | -15% |
| US Energy (XLE) | +45% |
How did International Equities perform?
| Japan Equities (EWJ) | -58% |
| EU Equities (broad) | -44% |
| Intl Developed Mkts (EFA) | -42% |
| EM Equities (broad) | -28% |
| UK (EWU / FTSE 100) | -26% |
| Germany (EWG / DAX 40) | -20% |
| France (EWQ / CAC 40) | -19% |
| Spain (EWP / IBEX 35) | -18% |
| Italy (EWI / FTSE MIB) | -17% |
How did Fixed Income perform?
| High Yield (HYG) | -28% |
| Gov. Bonds Long (TLT) | -20% |
| Corp Bonds IG (LQD) | -15% |
| Aggregate Bonds (AGG) | -10% |
| Gov. Bonds Short (SHY) | -3% |
How did European & UK Fixed Income perform?
| EUR Corp Bonds HY | -30% |
| Italian BTP 10Y | -26% |
| UK Gilts 10Y | -23% |
| EUR Corp Bonds IG | -18% |
| German Bund 10Y | -12% |
How did Real Assets perform?
| REITs (VNQ) | -35% |
| Commodities (DJP) | +58% |
| Silver | +90% |
| Gold | +120% |
How did Cash perform?
| Cash / Money Market | +8% |
How did UCITS European ETFs perform?
| Invesco EQQQ NASDAQ-100 UCITS (EQQQ) [UCITS] | -62% |
| iShares Core S&P 500 UCITS (CSPX) [UCITS] | -46% |
| Vanguard FTSE All-World UCITS (VWRL) [UCITS] | -44% |
| Vanguard FTSE Dev. Europe UCITS (VEUR) [UCITS] | -44% |
| iShares MSCI World UCITS (IWDA) [UCITS] | -42% |
| iShares MSCI EM UCITS (IEMG) [UCITS] | -28% |
| Xtrackers Euro Stoxx 50 UCITS (XESX) [UCITS] | -19% |
| Xtrackers Eurozone Govt Bond UCITS (XGLE) [UCITS] | -12% |
| iShares Core EUR Aggregate UCITS (IEAG) [UCITS] | -12% |
| Invesco Physical Gold ETC (SGLN) [UCITS] | +120% |
Sector Breakdown
HARDEST HIT SECTORS
MOST RESILIENT SECTORS
Recovery Timeline
5 years 9 months for the S&P 500 to regain its January 1973 high in nominal terms (July 1980); in inflation-adjusted terms the loss was not recovered until 1985
Time from trough to prior all-time high
PORTFOLIO STRESS TEST
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Historical data is educational only. Not financial advice. Past crisis returns do not predict future performance.