It was a difficult year for stocks, it is getting worse.
On Friday, the S&P 500 index entered the bear market for the first time since 2020, signaling the closing of the market below the January record.
The bear market occurs when the stock index falls 20 percent or more from its most recent high.
For the S&P 500 index, which includes large companies such as Amazon, Apple, Bank of America և Walmart է, it is most often used as a proxy for a wider stock market. – The most recent high was on January 3. Since then, the sale has been driven in part by the Federal Reserve’s decision to raise its key interest rate, further raising borrowing costs and thus limiting the overall financing environment.
Sales only accelerated as inflation fluctuated at a 40-year high as the Federal Reserve continued its tightening measures.
Shares on Wednesday saw their worst one-day decline in years after retailer Target reported earnings և earnings that were worse than analysts had expected. Shares of other retailers such as Walmart also fell.
“The sharp sell-offs at these companies (as well as at other commodity / consumer companies this quarter) show that inflationary pressures are finally affecting earnings,” said Manesh S., Barclays’s US stock strategy manager. Despanden. Thursday celebration.
The Dow Jones Industrial Average, which includes 30 well-known, mostly mature American companies, is about 13 percent below its most recent peak, so it has a little more room to act before entering the bear market.
But the Nasdaq composite index, which weighs heavily on tech companies, is already in the bear market. It entered on March 1, after reaching the peak in November.
In general, it is no longer clear whether companies will be able to maintain healthy sales margins and, consequently, profitability in the near future, Despande said.
Analysts say long-term shareholders should not panic about the sale, even if the downturn continues.
“I always advise you to skip the market schedule, because you have to be twice right,” said Sam Stoval, chief investment strategist at CFRA Research Group. “You have to be right when you go out. Usually people come out right, but you rarely see that people are right when you have to go in again.”
The most recent bear market, in 2020, lasted about a month. Prior to that, in 2009, the S&P 500 entered the bear market, which lasted about two months. Other bear markets, including those beginning in 2007, 2000 and 1980, lasted more than a year.
However, there are signs that this one may take longer, which means investors can think about how much loss they can face.
“We have more downturns as this adjustment process continues to evolve,” said Scott Ladner, CIO of Horizon Investments. “So if you need money for the next three months, maybe take your pieces and go out. But after that, we have the opportunity for the revenues to find their stable state. ”
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