Wall Street’s crash continues, S&P 500 nears bear market

Wall Street’s crash continues, S&P 500 nears bear market

Stocks fell modestly on Thursday, with the S&P 500 heading for its sixth consecutive weekly decline and nearing bear market territory.

Trading was choppy and the S&P 500 closed just 0.1 percent lower after a sharp rally after falling 1.7 percent on Wednesday.

The Nasdaq Composite was also volatile but remained little changed at the end of the day.

Although this year’s Wall Street sell-off — which followed the S&P 500’s 90 percent surge in the previous three years — began with concerns about rising inflation and interest rates and how the combination could hurt the economy, it has a Life assumed his own as investors see each new data point as a cause for concern.

The sell-off has also hit cryptocurrencies like bitcoin, as well as metals and other commodities like copper and oil, losses reflecting weaker sentiment in financial markets as well as concerns about the global economy.

The decline has brought the S&P 500 to the brink of a bear market, Wall Street’s term for a decline of 20 percent or more from its last high. The label is intended to show how gloomy the mood among investors has become. As of Thursday, the index was down about 18 percent from its Jan. 3 peak. The Nasdaq Composite is deep in bear market territory, down 29 percent from its November high.

This week’s decline came alongside fresh updates on the pace of inflation in the United States. The consumer price index rose 8.3 percent in the year to April, the government said on Wednesday, while a measure of prices paid to producers rose 11 percent. Although both indicators showed that inflation has cooled slightly compared to the previous month, they remain uncomfortably high.

For equity investors, the inflation data feeds directly into views on how aggressively the Federal Reserve will hike interest rates: Higher borrowing costs will slow growth and also dampen interest in risky assets.

Analysts say the gloomy sentiment among equity investors is unlikely to change until they get a grip on when the Fed, which hiked interest rates by half a percentage point this month and is expected to do so again at its June and July meetings will slow down the speed increases. That won’t be clear until it’s certain that inflation has peaked.

“The Fed will want to see clearer evidence that inflation is cooling and higher rates are slowing demand before contemplating the end of the current rate hike cycle,” Comerica Bank chief economist Bill Adams wrote in a note to clients on Thursday .

Leave a Reply

Your email address will not be published.