NEW YORK (AP) – Wall Street rumbled to the edge of a bear market after another drop for stocks briefly sent the S&P 500 more than 20 per cent below its peak set early this year.
The S&P 500 index, which sits at the heart of most workers’ 401(k) accounts, was down as much as 2.3 per cent for the day before a furious comeback in the final hour of trading sent it to a tiny gain of less than 0.1 per cent. It finished 18.7 per cent below its record, set on January 3. The tumultuous trading capped a seventh straight losing week, its longest such streak since the dot-com bubble was deflating in 2001.
Rising interest rates, high inflation, the war in Ukraine, and a slowdown in China’s economy are all punishing stocks and raising fears about a possible United States (US) recession.
Compounding worries is how the superhero that’s flown to Wall Street’s rescue in the most recent downturns, the Federal Reserve, looks less likely to help as it’s stuck battling the worst inflation in decades.
The S&P 500 finished the day up 0.57 points at 3,901.36. The Dow Jones Industrial Average swung from an early loss of 617 points to close 8.77 higher, or less than 0.1 per cent, at 31,261.90. The Nasdaq composite trimmed a big loss to finish 33.88 points lower, or 0.3 per cent, at 11,354.62.
Because the S&P 500 did not finish the day more than 20 per cent below its record, the company in charge of the index says a bear market has not officially begun. Of course, the 20-per-cent threshold is an arbitrary number.
“Whether or not the S&P 500 closes in a bear market does not matter too much,” said Brian Jacobsen, senior investment strategist at Allspring Global Investments. “A lot of pain has already been experienced.”
Many big tech stocks, seen as some of the most vulnerable to rising interest rates, have already fallen much more than 20 per cent this year.