Current Bear Market

Current reality - The stock market is in the midst of a historic rout, and not even a new Harry Styles album can save it. 

Fact is, the US’ three major equity indexes are experiencing their worst stretch of losses in decades.

The Dow posted its eighth straight weekly loss, which is its longest weekly losing streak since 1923.

The S&P has lost ground for seven straight weeks, its longest losing streak since 2001.

The Nasdaq has dropped more from its peak last November than when the world shut down in spring 2020. The world was shut down then, but the Nasdaq is doing worse now.

What’s going on? Simply put, investors are betting that the US economy is barreling toward a recession. Every recession since 1968 has prompted a bear market like the one we’re currently in.

All the "bear necessities" are cropping up: Inflation is ripping at 8.3%, forcing the Fed to slam the brakes on the economy. The war in Ukraine and Covid lockdowns in China are adding to the concerns. And this week, any optimism was dashed when old reliables like Target and Walmart posted lousy results, sending their stocks tumbling the most since the market crash of 1987.

Get used to seeing red: In the 14 bear markets since 1945, stocks have lost an average of 36% over 289 days, according to Hartford Funds.

Bottom line: While past downturns sent the Fed rushing into the phone booth to play superhero, don’t expect it to save the day this time around. In fact, a big stock market sell-off is exactly what the Fed wants to see in order to slow economic activity, and in turn, bring inflation back to normal.

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