The brutal market sell-off pushed the S & P 500 into a bear market on Friday , and the rout can get a lot worse from here if history is any guide. The S & P 500 is now more than 20% below its intraday and closing records reached in January, the commonly used definition of a bear market. There have been 14 bear markets since World War II and, on average, the S & P 500 has pulled back a median 30% and the downturn has lasted a median 359 days, according to Bespoke Investment Group. We are just 137 days out from the S & P 500’s record close shortly after 2022 began. Since the Federal Reserve increased its benchmark rate by half a percent last week in an aggressive effort to fight inflation, investors have been nervous. Investors have many worries, including the threat of war in Eastern Europe, the looming pandemic in China, and issues in global supply chains. On Wednesday, the S & P 500 suffered its worst one-day decline since June 2020, losing about 4%. After back-toback quarterly reports from Target, Walmart which revealed higher fuel costs and restrained demand for goods and services, the market tumbled. This is despite some of today’s highest inflation levels in decades. “The stock market will remain in purgatory until the Federal Reserve smothers the inflationary wildfire with higher interest rates that cool consumer demand for goods, services, houses and hotel rooms,” said Ryan Belanger, founder of Claro Advisors. With rising rates hitting the tech-heavy Nasdaq composite, it has suffered more. It is now down almost 29% and 31% respectively from last November’s record high. Belanger stated that investors should be able to accept significant upside and downside moves in stock prices, as this is what happens during periods of great uncertainty.
