The stock market sell-off has been fast and furious, pushing the S & P 500 closer and closer to a bear market. If the rout intensifies further to qualify as a bear market, history shows that the bloodbath won't end anytime soon. A bear market marks a 20% decline from all-time highs. The recent three-day sell-off has pushed the S & P 500 almost 17% below its record high, as of Monday's close. There have been 14 bear markets since World War II and, on average, the S & P 500 has pulled back 30% and the downturn has lasted 359 days, according to Bespoke Investment Group. Investors have been on edge since the Federal Reserve raised its benchmark interest rate by half a percentage point last week, the most aggressive step yet in its fight against a 40-year high in inflation. The monetary tightening only adds to a list of worries for investors, ranging from war in Eastern Europe, the pandemic's path in China and global supply chain issues. "For the first time in over a decade, investors face both a hawkish Federal Reserve and genuine inflation pressure," said Ross Mayfield, investment strategy analyst at Baird. "This has led to the sort of rate-driven selloff that can hit stocks (especially growth companies) and bonds at the same time." The S & P 500 has fallen more than 15% in 2022 and it briefly tumbled below 4,000 to the lowest level in a year during the recent sell-off. The tech-heavy Nasdaq Composite has been hit even harder, down 24% year to date and off 27% from its record high, reached last November. "With the Fed planning to hike rates aggressively for the rest of 2022, geopolitical tensions becoming more entrenched, and midterm election rhetoric ramping up, this heightened volatility environment seems likely to persist," Mayfield added.
The stock market sell-off has been fast and furious, pushing the S&P 500 closer and closer to a bear market. If the rout intensifies further to qualify as a bear market, history shows that the bloodbath won't end anytime soon.