The S & P 500 has been flirting with bear market territory, as it tries to find a bottom, but how low it goes depends on whether the economy tips into recession. If the S & P 500 were to reach 3,837.24, that would push the index into a 20% downdraft, considered a bear market by many Wall Street pros. The broad market index ended Wednesday at 3,924, down 18.6% from its Jan. 4 intraday high. On Thursday, the S & P 500 continued its decline, briefly touching a low of 3,876.58 before closing at 3,900.79. The 20% is not an official level, but a rule of thumb used by strategists to give context to steep declines. The extent of the fall into bear market territory has clearly been linked to whether the economy also dips into recession. If there is no recession, there could be a shallow bear market, with the S & P dropping to just around the low 3,800 level. But the S & P 500 could fall much further, to 3,000 by some estimates, if there is a recession. According to Evercore ISI, the last three non-recession bear markets declined an average 21.3% during 2018, 2011 and 1998. But the last three recessionary bear markets were down 47.9%, the firm said. Those were in 2000-2002, 2007-2009 and 2020. "Nobody knows for sure how deep a bear market or recession is likely to go in advance. My big concern is how bad inflation is and how much the Fed will need to do in terms of raising rates to combat the high inflation," said Sam Stovall, chief investment strategist at CFRA. "Every time we go to this level of inflation, we did fall into recession." The consumer price index for April rose by 8.3% , below March's peak of 8.5%. Stovall said CFRA economists are not forecasting a recession this year or next. The economy contracted in the first quarter by 1.4% . A second negative quarter of gross domestic product (along with some other determining factors) likely would indicate a recession, but economists do not expect a further contraction at this point. CFRA economists expect growth of 3.5% in each of the final three quarters of 2022. "I would tend to think that we could ultimately see a bear market that goes as deep as an upper 20s percent decline, if there is a recession," Stovall said. "If there's no recession, we could still have a bear market, but it would be shallower." Stovall expects the S & P could test the 3,819 level [in bear market territory], and it could take a deeper fall to support at 3,500. Closing in on a bottom? Jonathan Golub, chief U.S. equity strategist at Credit Suisse, is in the camp that believes the sell-off is closing in on a bottom. He trimmed his S & P 500 forecast to 4,900 for year-end from 5,200. Golub said he does not expect a recession until at least 2024, and he expects corporate profits to hold up despite high-profile earnings misses from Walmar t and Target this week. "There's always a recession in your future," he said. "The question is whether it's three months away or three years away." He said now is a good time to buy, but if investors believe a recession is coming next year they should not be adding to stock holdings. Binky Chadha, chief global strategist at Deutsche Bank, said in a note that the market is currently pricing in a recession, but he does not expect one soon. "Our baseline view, in line with our current house economics view, is for no recession imminently, with a relief rally recouping the prior peak by year-end," he wrote in a note. If the economy avoids recession, and growth and the labor market hold up, Deutsche analysts expect the market to reach 4,700 to 4,800 by the end of the year. "The risk is that a protracted sell-off this late in the cycle prompts a slide into a self-fulfilling recession," Chadha noted. In "the event we do slide into recession, we see the market sell-off going well above average, ie. into the upper half of the historical range given elevated initial overvaluation, -35% to -40% or S & P 500 3000," they wrote.