With U.S. oil topping $100 a barrel Monday, many investors are starting to worry about the impact surging energy prices will have on equities, potentially leading to a correction (down 10%) or bear market (down 20%), depending on how long the U.S.-Iran war lasts. In a note out Monday, CFRA Research outlined what investors should expect if oil pushes stocks down further. The S & P 500 has experienced 18 bear markets since the Great Depression. Three have been due to oil shocks, according to CFRA chief investment strategist Sam Stovall. On average, the S & P’s oil shock-induced decline lasted 13 months, and led to a slump of just under 30%. The average is affected most by the severity of the bear market that began in 1973, when OPEC implemented an embargo against all countries that supported Israel in the Yom Kippur War. Oil prices quadrupled, and the economy fell into recession. The moves in the 1956 and 1990 bear markets are smaller. Stovall noted that some don’t even consider the 1990 event a real bear market, as it did not reach the technical 20% definition investors use. In 1956, the Suez Canal crisis — when Egypt seized control of the waterway from a British and French-owned company — caused a major disruption in the oil supply chain. While a recession followed in 1957, it’s not clear t …
