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Market Extra: S&P 500 is dangerously close to a bear market despite bounce. Here’s the number

The latest bull market for U.S. stocks remains on the brink of expiring, with the benchmark S&P 500 just shy of the threshold that marks bear territory. The S&P 500 SPX, +2.14% finished 0.1% lower at 3,930.08 on Wednesday, after falling as far as 3,858.87 at its session low. That was the index’s lowest close…

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The latest bull market for U.S. stocks remains on the brink of expiring, with the benchmark S&P 500 just shy of the threshold that marks bear territory.

The S&P 500
SPX,
+2. 14%

finished 0.1% lower at 3,930. 08 on Wednesday, after falling as far as 3,858. 87 at its session low. That was the index’s lowest close since March 25, 2021, and left it 18.1% below its record finish from early January. A Friday bounce for stocks has seen the S&P 500 gain 2.6% on Friday to trade above 4,030.

A close below 3,837. 25 would mark a 20% fall, according to Dow Jones Market Data, meeting the widely used technical definition of a bear market.

The S&P 500 entered correction territory — a fall of 10% from a recent peak — last month, its second such foray this year. Stocks have had a difficult April, followed by a poor May. Investors continue to sell megacap tech stocks and other pandemic darlings amid investor anxiety over high inflation. The Federal Reserve is increasing interest rates quickly and tightening monetary policy to control those price pressures.

Investors jittery about the upcoming reading on April’s consumer price inflation on Wednesday hoped that it would show inflation at its peak and provide some relief. Although the annual rate of inflation fell to 8.3% in April from 8.5% in March it was still higher than the 8.1% expected by economists. Core CPI, which excludes food and energy, also showed an unexpected monthly increase.

Read: What’s next for stocks and bonds after inflation data fails to provide ‘watershed moment’

Through Thursday, the S&P 500 was down 4.9% in May, while the tech-heavy Nasdaq Composite
COMP,
+3. 60%
,
It had fallen 7.8% earlier in the year and was now in a bear market. The blue-chip Dow Jones Industrial Average had also dropped 7.8%
DJIA,
+1. 08%

It was around 3.8% lower.


Dow Jones Market Data

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