S&P 500 confirms bear market as recession anxiety grows

NEW YORK (Reuters) – U.S. stocks fell on Monday, as the Standard & Poor’s 500 Index confirmed it was in a bear market, raising fears that expected large interest rate increases by the Federal Reserve could push the economy into recession.

The benchmark Standard & Poor’s has fallen for four consecutive days, its longest losing streak in three months, with the index now down 21.8% from its record closing high to confirm the start of a bear market on Jan. 3, according to a commonly used definition.

All major S&P sectors were sharply lower, with only 5 components of the S&P 500 in positive territory on the day. Markets have been under pressure this year with higher prices, including a jump in oil prices due to the war in Ukraine, which put the Federal Reserve on the right track to take aggressive measures to tighten its monetary policy, such as raising interest rates.

The Federal Reserve is due to make its next policy announcement on Wednesday, and investors will be focused heavily on any evidence of how seriously the central bank is raising interest rates. Read more

Heavyweights in the high-growth market such as Apple Inc (AAPL.O)Microsoft Corporation (MSFT.O) and Amazon.com Inc (AMZN.O) The biggest drawback was the S&P 500, with the 10-year US Treasury yielding 3.44%, the highest since April 2011. Growth stocks are likely to see their earnings suffer in a price environment.

A higher-than-expected CPI reading on Friday prompted traders to price a total of 175 basis points in rate hikes by September, while expectations for a 75 basis point hike at the June meeting jumped to nearly 30% from 3.1% Last week, according to CME Fedwatch.

“The market has been trying to get around the idea that inflation has peaked, and that the Fed is not going to be any stronger,” said Ross Mayfield, investment strategist at Baird in Louisville, Kentucky.

“This story broke down on Friday with the CPI report, which showed broad inflation taking hold everywhere you look.”

Dow Jones Industrial Average (.DJI) It fell 876.05 points, or 2.79%, to 30,516.74, the Standard & Poor’s 500 . (.SPX) It lost 151.23 points, equivalent to 3.88%, to 3749.63 points, and the Nasdaq Composite (nineteenth) It fell 530.80 points, or 4.68%, to 10809.23 points.

The longest bear market for the S&P 500 index lasted for just over five years, starting on March 6, 1937 and ending on April 29, 1942 while the shortest one lasted just over a month, starting on February 19, 2020 and ending on March 23, 2020, according to S&P Dow Jones Indices.

It took an average of just over a year for the index to reach its lowest levels during bear markets, and then nearly two more years to return to its previous highs, according to CFRA Research. Read more

In addition, the 10-year US Treasury yield curve has briefly inverted for the first time since April, which many in the markets see as a reliable signal that a recession may come in the next year or two. Read more

Nasdaq Composite Index (nineteenth)which suffered its fourth consecutive decline, confirmed that it was in bear market territory on March 7 and has fallen by about 30% this year.

CBOE Volatility Index (.VIX), also known as the Wall Street Fear Barometer, rose to its highest level since May 9 at 35.05 before closing at 34.02. However, many analysts see the level as rather weak and could mean more selling pressure in the store.

“This is a market that doesn’t seem to be giving up as much as it is frustrating,” said Rob Haworth, senior investment analyst at US Bank Wealth Management in Seattle.

“Even with some of the securities dumped, it’s not deep enough, violent enough to see people have taken their positions.”

Stocks associated with cryptocurrency and blockchain, including Riot Blockchain (RIOT.O)Digital Holdings Marathon (Marao) and Coinbase Global (COIN.O)All slumped with bitcoin down more than 10% after US crypto lender Celsius Network froze withdrawals and transfers due to “extreme” conditions.

Volume on US exchanges was 14.98 billion shares, compared to an average of 11.95 billion for the full session over the last 20 trading days.

Low issues outnumbered advanced issues on the New York Stock Exchange by 16.62 to 1; On the Nasdaq, the ratio was 7.00 to 1 in favor of declining stocks.

The S&P 500 hit a new 52-week high and 76 new low. The Nasdaq Composite recorded 12 new highs and 743 new lows.

Additional reporting by Louis Kroscoff, Stephen Kolb and Noel Randwich; Editing by Aurora Ellis

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