(Bloomberg) – The two-year run of the stock, which started in the depths of coronavirus panic and turned into the strongest bull market on record, is on the verge of extinction.
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The S&P 500 slipped more than 2% on Friday, hitting a record high of 20% on January 3 at 4,796.56. If the business continues to make losses, it will be the first good market after the epidemic hit in February 2020.
The broader equity benchmark is in motion for a seven-week slide, its longest weekly loss trend since March 2001, when the Dow Jones Industrial Average is heading for its eighth week of decline, the longest since 1923. The tech-heavy Nasdaq 100 index is also down for the seventh week, the longest stretch since 2011.
On both sides of the aisle sits the Federal Reserve, whose unprecedented efforts to boost the economy in early 2020 helped more than double the S&P 500 by the end of last year. Now, with inflation soaring, central bankers have reined in the stimulus, with shares being sold into the hands of investors that a recession is inevitable.
“All of this has been driven by two major forces that were repeated this week: one is inflation and how stubbornly high it is. And the second is how aggressive the Federal Reserve will be in controlling it, “said Art Hogan, chief market strategist at National Securities.
Technology stocks are dragging the market down with the Nasdaq 100 index sliding as much as 3% on Friday. Apple Inc. And Amazon.com is ready for an eighth weekly drop, where Tesla Inc. 7 in the fourth place The team is under a lot of pressure this year. Technology is the smallest sector in the US market, according to S3 partners, “making about $ 1 out of every $ 5 short.” Software is the smallest industry in the sector.
The consumer-oriented sector has been the worst performing group in the S&P 500, dropping 35% from its index high in January. Only the S&P 500 sector has gained strength this year, an increase of 41% since the index peaked.
Friday’s sell-off marked a turbulent week for U.S. stock markets, which saw consumer volatility across the epidemic-era bull market.
Target Corporation has plunged the most since Black Monday, 1987, a day after Walmart Inc. suffered similar consequences, signaling that runaway inflation is hurting U.S. consumers and reducing profit margins.
“The Fed has been an early driver of this market downturn, but recent news from retailers has added additional concern to the outlook for the economy,” said Adam Phillips, managing director of portfolio strategy at EP Wealth Advisors. “Now that we’ve crossed the 20% level, the big question is where do we go from here?”
Since 1929, the S&P 500 has entered the bear market 17 times, including Fridays, according to CFRA research data. The longest period lasted 998 days from September 1929 to June 1932. The shortest time was February 19, 2020 to March 23, 2020, CFRA data shows only 33 days.
On average, bear markets declined by about 38%, although according to CFRA the average loss since 1946 was less than 33%.
“It’s bound to happen because I think the Bears wanted to push it there. And a fair amount of people were bored,” said Mike Mulani, director of global market research at Boston Partners. “Positioning is catching on with the feeling now.”
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