Bear market

Investors commonly apply the phrase to a broad stock index like the S&P 500 or Dow Jones Industrial Average, but it also works for individual stocks. More from ...

Bear markets are a regular feature of the stock market. Technically, it's a drop of 20% or more from recent highs. "It's a shortcut in language around the financial markets that people use," said Charlie Fitzgerald III, an Orlando, Florida-based certified financial planner, of bear markets.

The stock market's slump this year briefly pulled the S&P 500 into what's known as a bear market Friday, before a late rally put the index in the green.

It took less than three weeks for stocks to rise 20% from their low in March 2020. The biggest decline since 1945 occurred in the 2007-2009 bear market when the S&P 500 fell 57%. That includes two separate days in the middle of the 2007-2009 bear market where the S&P 500 surged roughly 11%, as well as leaps of better than 9% during and shortly after the roughly monthlong 2020 bear market. If you need the money now or want to lock in the losses, yes. Big technology stocks and other winners of the pandemic were seen as the most expensive, and those stocks have been the most punished as rates have risen. Higher rates also make investors less willing to pay elevated prices for stocks, which are riskier than bonds, when bonds are suddenly paying more in interest thanks to the Fed. The risk is the Fed could cause a recession if it raises rates too high or too quickly. Consumer prices are at the highest level in four decades, and rose 8.3% in April compared with a year ago. The central bank has already raised its key short-term interest rate from its record low near zero, which had encouraged investors to move their money into riskier assets like stocks or cryptocurrencies to get better returns. Market enemy No. 1 is interest rates, which are rising quickly as a result of the high inflation battering the economy. The last bear market happened just two years ago, but this would still be a first for those investors that got their start trading on their phones during the pandemic. Big swings such as the one seen Friday have been commonplace.

The index's slide highlights investors' increasingly dark economic outlook — one fueled by slowing economic and earnings growth, rising inflation and the ...

According to preliminary data, the S&P 500 gained 0.01% for the day on Friday and lost 3% for the week. Only one bear market in the last 50 years, the market crash of 1987, was not accompanied by a recession "I don't think that discomfort leaves us anytime soon, especially given the fact that monetary and fiscal policy are no longer at investors' backs." for the index and follows months of precipitous market drops. I don't know that we're going to bounce back out of it very quickly." These conditions will likely continue until there's enough economic data to prove that inflation is cooling, said Liz Young, head of investment strategy at SoFi. "I don't think we're at quite peak freakout yet," she said.

This is why the sell off has so far been more concentrated in growth stocks. Increasing discount rates have caused markets to focus more on earnings now than ...

If you don’t need the money you are investing in stocks for many years, then you’re still likely to come out ahead if history is any guide even with bear markets along the way. However, bear markets are often a time for fixed income to shine. As in most markets, diversification can help smooth your returns in a bear market. Ironically one of the best indicators of a recession is the stock market itself. As such one of the trends we’ve seen in 2022 is value stocks outperforming growth. Increasing discount rates have caused markets to focus more on earnings now than earnings in the future.

A Wall Street street sign in New York. The stock market remains stuck in a slump amid worries about how inflation is squeezing businesses and consumers. (John ...

Although its source is different, the gloom on Wall Street is mirroring a sense of exasperation across the country. But these traders, called “retail investors” by Wall Street to differentiate them from big institutional investors, have been pulling back as stocks have tumbled. Through it, the S&P 500 more than doubled, as a new generation of investors met seemingly every wobble with the rallying cry to “Buy the dip!” But the market’s worries swung higher after Russia’s invasion of Ukraine sent prices spiraling further at grocery stores and gasoline pumps, because the region is a major source of energy and grains. They even got GameStop to surge suddenly to such a high level that it sent shudders through professionals on Wall Street. With inflation at its highest level in four decades, the Fed has aggressively turned away from keeping interest rates super low in order to support markets and the economy. “I think plenty of investors were scratching their heads and wondering why the market was rallying despite the pandemic,” Jacobsen said. Instead, it’s raising rates and making other moves in hopes of slowing the economy enough to tamp down inflation. Rising interest rates, high inflation, the war in Ukraine and a slowdown in China’s economy are all punishing stocks and raising fears about a possible U.S. recession. That’s all compounded with some disappointing data on the U.S. economy, though the job market remains hot. Of course, the 20% threshold is an arbitrary number. The tumultuous trading capped a seventh straight losing week, its longest such streak since the dot-com bubble was deflating in 2001.

Since World War II, the S&P 500 has experienced 17 bear markets or near bear markets, according to an analysis by LPL Financial's Ryan Detrick. Number 18 is all ...

Investor insight: Concerns about the UK economy have caused the pound to collapse. China's so-called "LPR" is the rate at which commercial banks lend to their best customers. Consumer spending and factory production both shrank sharply last month, while unemployment surged to the highest level since the initial coronavirus outbreak in early 2020. It's easy for every bear market to seem like the end of the world, as nervous traders anxiously eye a sea of red. But with inflation rising at the fastest clip in decades, the central bank has signaled that it intends to remain hawkish for some time. It's never done that for very long before, which makes it harder to discern what the market response will be. It's hard to argue stress eating and other indulgences reveal that consumers are thriving. "That may very well turn out to be the environment we're in now." Analysts have long feared Evergrande's collapse could ripple across the property industry. It's just a question of when the recovery begins. Most analysts had expected a cut of five basis points, my CNN Business colleague Laura He reports. They're a sign of extreme negative sentiment on Wall Street and are more severe than garden-variety sell-offs.

Investors are selling as they worry about inflation, interest rates and a potential recession.

The company’s 25 percent decline in profit from the previous year was a big surprise to analysts. Unemployment is approaching the lowest rate in decades, and the economy has regained nearly 95 percent of the 22 million jobs lost at the height of coronavirus lockdowns. Before the war in Ukraine and Covid’s resurgence in China, the International Monetary Fund was projecting global growth of 4.4 percent this year. Janet L. Yellen, the Treasury secretary, said high food and energy prices were creating “stagflationary effects” — the combination of high inflation and a stagnating economy. The Russian invasion of Ukraine and the response from other countries has disrupted crucial supplies of energy, wheat and other staples. The company’s executives said they saw no signs of inflation starting to abate. At the heart of those fears was fresh evidence reported this week from retailers like Walmart and Target that rising costs were now hitting corporate America. During the darkest days of the pandemic, the American economy was propelled by consumers. Friday afternoon, the S&P 500 crossed the bear market threshold of a 20 percent decline from its peak on Jan. 3. Less than six months later, the S&P 500 began hitting new highs again, climbing 42 percent above its prepandemic level before starting to slide in January. Now the index is down more than 18 percent from its high point. But this week brought indications that some consumers may have reached their limit, and profits have started to shrink. Target and Kohl’s also said quarterly profits had plunged, adding to Wall Street’s unease.

BEIJING (AP) — Asian stock markets rose Friday after Wall Street fell closer to bear territory, China cut a key interest rate and Japanese inflation edged ...

Although its source is different, the gloom on Wall Street is mirroring a sense of exasperation across the country. But these traders, called “retail investors” by Wall Street to differentiate them from big institutional investors, have been pulling back as stocks have tumbled. But the market's worries swung higher after Russia's invasion of Ukraine sent prices spiraling further at grocery stores and gasoline pumps, because the region is a major source of energy and grains. Through it, the S&P 500 more than doubled, as a new generation of investors met seemingly every wobble with the rallying cry to “Buy the dip!” They even got GameStop to surge suddenly to such a high level that it sent shudders through professional Wall Street. With inflation at its highest level in four decades, the Fed has aggressively turned away from keeping interest rates super-low in order to support markets and the economy. “I think plenty of investors were scratching their heads and wondering why the market was rallying despite the pandemic," Jacobsen said. Instead it's raising rates and making other moves in hopes of slowing the economy enough to tamp down inflation. Rising interest rates, high inflation, the war in Ukraine, and a slowdown in China’s economy are all punishing stocks and raising fears about a possible U.S. recession. Of course, the 20% threshold is an arbitrary number. The tumultuous trading capped a seventh straight losing week, its longest such streak since the dot-com bubble was deflating in 2001. In this photo provided by the New York Stock Exchange, trader James Conti works on the floor, Friday, May 20, 2022.

The stock market's brutal year neared a grim milestone as the S&P 500's slide on Friday threatened to leave it in a bear market for the first time since ...

While the index is elevated compared to its long-term median, it is still below levels reached in previous major selloffs. On the flip side, shares of technology and other high-growth companies have been hit hard. A few areas of the stock market have been spared. It has already raised rates by 75 basis points this year and expectations of more hikes ahead have weighed on stocks and bonds. If history is any guide, a bear market would mean more pain could be in store for investors. The benchmark S&P 500 index fell below 3837.248 during Friday's session, a decline that on an intraday basis put it more than 20% below its Jan. 3 record closing high.

Since World War II, the S&P 500 has experienced 17 bear markets or near bear markets, according to an analysis by LPL Financial's Ryan Detrick. Number 18 is all ...

It’s never done that for very long before, which makes it harder to discern what the market response will be. But with inflation rising at the fastest clip in decades, the central bank has signaled that it intends to remain hawkish for some time. It’s just a question of when the recovery begins. “That may very well turn out to be the environment we’re in now.” It’s easy for every bear market to seem like the end of the world, as nervous traders anxiously eye a sea of red. That makes it difficult to find a helpful precedent for the bear market on tap.

Meanwhile, the Cboe SKEW Index -- implied volatility for bearish S&P 500 put contracts relative to calls -- is close to two-year lows. The relative lack of ...

The Federal Reserve's determination to raise interest rates until it squashes the highest inflation in decades is darkening the outlook across Wall Street, ...

read more read more /FEDWATCH Investors will get more insight into the central bank's thinking when minutes from its last meeting are released on May 25. Strategists at Goldman Sachs, meanwhile, earlier this week published a “Recession manual for US equities” in response to client inquiries on how stocks will perform in a downturn. "The Fed has bigger fish to fry and that's the inflation problem," said Phil Orlando, chief equity market strategist at Federated Hermes, who is increasing his cash levels. At issue is the so-called Fed put, or investors’ belief that the Fed will take action if stocks fall too deeply, even though it has no mandate to maintain asset prices.

A two-year run in stocks that began at the depths of the coronavirus panic and became one of most powerful bull markets on record is on the brink of ...

The only S&P 500 sector to gain this year is energy, which is up 41% since the index hit its peak. Tech stocks are dragging the market lower, with the Nasdaq 100 Index sliding as much as 3% on Friday. Apple Inc. and Amazon.com are poised for an eighth straight weekly drop, while Tesla Inc. falls for a fourth one. And the second is how aggressive the Federal Reserve will likely be to get it under control,” said Art Hogan, chief market strategist at National Securities. Now, with central bankers reining in stimulus as inflation surges, shares are selling off at the hands of investors convinced a recession is all but unavoidable. The tech-heavy Nasdaq 100 Index is also down for a seventh week, its longest stretch since 2011. The S&P 500 slipped more than 2% on Friday, pushing it 20% below its record closing high of 4,796.56 on Jan. 3.

Financial markets closed out the week with yet another head-spinning day, with one of the main indexes, the S&P 500, plunging for almost three hours into ...

Jason Furman: All of that is reassuring to me for the next six months to a year. Sometimes, you don't get a recession. And so, yes, sometimes, you get a recession. Jason Furman: Jason Furman: So part of what we're seeing here is a consequence of the Federal Reserve raising interest rates to stop inflation. Jason Furman: It's just the terrible earnings were because of the wages and because of the prices the retailers were paying. Jason Furman, an economist at the Harvard Kennedy School who served as a top adviser to President Obama, joins Judy Woodruff to discuss. By the close of trading, the Dow industrials were actually up almost nine points to close at 31261. The tech-heavy Nasdaq is already in a bear market.

It was another tough week on Wall Street, as the relentless sell-off seen in stocks shows no signs of abating anytime soon.

Jeremy Grantham, an investor famous for calling market bubbles told CNBC this week that today's bubble is worse than 2000 . "The other day, we were down about 19.9% on the S & P 500 and about 27% on the Nasdaq. I would say at a minimum, we are likely to do twice that," the co-founder of GMO told CNBC's Kelly Evans on "The Exchange" Wednesday. "If we are unlucky, which is quite possible, we would do three legs like that and it might take a couple of years as it did in the 2000s." "Unless we get something that is threatening to financial stability, they seem quite comfortable to watch the stock market go down as long as, in their mind, it's an orderly decline," he said Wednesday . What happens next: It depends on the economy Several strategists on the Street have already trimmed their year-end targets for the S & P 500, but many of them think what happens next depends on whether the U.S. economy falls into a recession. Deutsche Bank's Binky Chadha said in a note this week that the S & P 500 could tumble all the way down to 3,000 if a recession takes hold in the near future. "Inflation is proving sticky and the Fed's forward guidance is for a rate hiking cycle that has historically ended in recession more often than not (8 of 11 or 73% of the time), with the Fed acknowledging and accepting this risk," Chadha said, noting that his base case is not for an imminent recession. The strategist trimmed his 2022 S & P 500 base case target to 4,750 from 5,250 . Meanwhile, Bank of America said there's a "realistic worst case" scenario where the S & P 500 falls to 3,200, with strategist Savita Subramanian noting that the current market set-up looks a lot like the one seen as the 2000 dotcom bubble was bursting. But some on Wall Street fear that hawkish stance could tip the economy into a recession. Most believe we are in a bear market that began in January. The tech-heavy Nasdaq Composite fell deeper into its own bear market — now down nearly 30% from its record. Here's a breakdown of why the market tumbled this week, and what pros on Wall Street think could happen next. The Dow and S & P 500 fell 3.6% and 4%, respectively, that day — their biggest one-day losses since June 2020. Meanwhile, the Federal Reserve has stated it will keep raising rates to quell those pressures — raising worries that tighter monetary policy could tip the economy into a recession. On top of all of this, it doesn't seem like the Fed will come to the market's aid anytime soon. The S & P 500 and Nasdaq Composite fell for a seventh straight week, losing 3.1% and 3.8%, respectively.

The S&P 500 is in a bear market, ~20% off its peak. Many high-quality businesses have their stock down more than 50%. Bear markets feel like a risk as we go ...

A bear market is a unique opportunity to invest for the long term. Unless you are in the business of day trading, you should always be able to "sleep on it" and let a day go by before you pull the trigger on your investment decision. By setting the expectation that your next pick needs to have the potential to beat the performance of all your other investments combined, you are setting the bar extremely high and challenging your own goal. What prevents many investors from keeping a steady hand in a time of hardship is the daunting thought of waiting for years before the portfolio has a shot at hitting a new high again. What matters is to define a plan and stick to it. Is there truly a call to action, or are you reacting to headlines and market movements? If you are in the wealth accumulation phase of your life, with a regular paycheck and monthly savings to invest, a bear market is something to celebrate. They buy too much too fast in the early phase of a downturn and end up with no dry powder when the market continues to fall. Journaling is the closest thing you'll ever have to a drill in investing. And it would be silly to expect all market sell-offs will turn into the Great Depression. We have already had two bear markets of epic proportion in the past two decades, and our instinct is to assume more of the same. So having a buyer's mentality in the face of a market meltdown is essential. I shared with App Economy Portfolio members a version of the "cycle of emotions" that comes with the market's ups and downs.