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什么是熊市(Bear Market)?

The S&P 500 Is Officially in a Bear Market. Here’s What to Know.

The 什么是熊市(Bear Market)? stock benchmark is more than 20% below its record, falling into a bear market for the first time in more than two years

As markets react to interest-rate hikes and the threat of a recession, stocks are dropping closer to bear-market territory. WSJ’s Gunjan Banerji explains what it takes to push stocks back into a bull market and why it’s hard 什么是熊市(Bear Market)? to predict when they’ll turn around. Illustration: Jacob Reynolds

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The benchmark S&P 500 stock index has fallen into what investors call a bear market. If you’re just tuning in or watching your retirement savings shrink, here’s what you need to know about the grizzly decline.

What is a bear market?

Stocks enter a bear market when widely followed indexes 什么是熊市(Bear Market)? such as the S&P 500 or the Dow Jones Industrial Average sink 20% from their 什么是熊市(Bear Market)? high points. There is nothing official about the determination. The designation is a shorthand way for Wall Street to mark when markets have taken a tumble. It also gives investors a moment to reflect on how the current action in markets compares to previous downdrafts.

If history repeats itself, the bear market has 6 months of pain ahead, Bank of America’s chief strategist says

U.S. stocks have had a rough start to the year after a standout 2021—and if history is any guide for what’s to come, things could get 什么是熊市(Bear Market)? even worse from here.

The S&P 500, which returned nearly 27% to investors last year, has been dragged down more than 15% year to date by rising interest rates, geopolitical 什么是熊市(Bear Market)? tensions, persistent inflation, and a number of other bearish factors.

The big question on most investors’ minds: How much further will stocks drop?

Bank of America’s chief investment strategist Michael Hartnett has looked backward, and he has a hibernation outlook. Based on historical bear market trends, he said, there could be months of pain ahead.

“In the last 19 什么是熊市(Bear Market)? bear markets, the average peak to trough decline has been 37% with an average duration 什么是熊市(Bear Market)? of 289 days. If history were to repeat then today’s bear market ends in October 2022 with the S&P at 3000,” Bank of America Research analysts wrote in a Sunday note.

If that bears out, it means the S&P 500 still has another roughly 25% downturn ahead of it from current levels.

“Bear markets are quicker than bull markets”什么是熊市(Bear Market)?

Hartnett noted that in the past 25 years, the NYSE composite has always fallen significantly 什么是熊市(Bear Market)? below its 100-week moving average during bear markets, but this year the index is trading just barely below that level, which could mean more downside lies ahead.

While about half 什么是熊市(Bear Market)? of the stocks in tech-heavy Nasdaq are down 50% or more from their peaks, and many speculative assets in the cryptocurrency space have seen sharp drawdowns in recent weeks, Hartnett argues Wall Street will spend much of the year working through an “inflation shock,” a “rates shock,” and a “recession shock” that will lead to negative returns and increased volatility.

The “good news is bear markets are quicker than bull markets,” he said.

The investment strategist added that while many investors have sought protection in commodities since the start of the year, he believes these holdings should be sold moving forward “given recession risk.”

Hartnett 什么是熊市(Bear Market)? 什么是熊市(Bear Market)? isn’t bullish on the tech space, either, arguing that more speculative tech stocks will remain in a bear market for the next two years, even if the S&P 500 bottoms 什么是熊市(Bear Market)? out. A floor does not equal a new bull market for tech stocks, he said.

The investment strategist isn’t alone in calling for stocks to fall amid a U.S. recession either. From billionaire investors to top investment banks, recession fears are spreading on Wall Street.

Jamie Dimon, the CEO of JPMorgan Chase and one of the most powerful voices in finance, argued there’s only a 33% chance the Federal Reserve can ensure a “soft landing” for the U.S. economy—in which rising inflation is tamed, but a recession is 什么是熊市(Bear Market)? avoided—in an interview with Bloomberg on Wednesday. And Deutsche Bank said in April that it believes a “major” recession will come by 2023.

Even former Fed officials have begun sounding 什么是熊市(Bear Market)? the alarm, with former Fed Chair Randal Quarles saying in an interview last week that 什么是熊市(Bear Market)? a recession is likely, “given the intensity of inflation.”

It's time to 'play defense' 什么是熊市(Bear Market)? with stocks experiencing a classic bear-market rally, Wells Fargo warns

Stocks won't exit the bear market until the Federal Reserve's last interest rate hike, according to Wells Fargo.

Investors need to be cautious despite major indices' recent gains, CIO Darrell Cronk told Bloomberg TV.

"什么是熊市(Bear Market)? This very much looks like a bear market rally… you've got to play defense," 什么是熊市(Bear Market)? Cronk said.

It's time for investors to get defensive and consider jumping out of stocks, which look caught in the middle of a bear-market rally, according to a Wells 什么是熊市(Bear Market)? 什么是熊市(Bear Market)? Fargo investment chief.

Darrell Cronk told Bloomberg TV he's skeptical about how well equities will perform over the rest of 2022, even though the S&P 500 has climbed more than 15% since hitting a low for the year in June.

"This is the question: Is this a bear market rally or the start of a new bull?" Cronk, CIO for Wells Fargo Wealth and Investment Management, said on Friday. "This to us very much looks like a bear market rally."

"People forget that as bear markets get 什么是熊市(Bear Market)? older, the bear market rallies get larger. This is the largest one we've seen, we've had six S&P 500 rallies during this bear of 7% or greater."

He believes the S&P 500's recent rally isn't sustainable, given the US benchmark has failed since April to break above its 200-day moving average. If stocks rise or fall 什么是熊市(Bear Market)? through this key resistance level, it's seen as a change in long-term direction.

"The fact that we've failed off the 200-day to us still says that you've got to play defense," Cronk said — suggesting they pivot away from stocks, and into less risky and volatile markets such as bonds or cash.

The Wells Fargo CIO said bear markets don't end three things happen: housing market forward indicators hit a bottom, earnings estimates fall significantly or trough, and the Federal Reserve is on the verge of stopping its interest rate hikes.

"You've got to get closer to the Fed being at or within sight of their last interest rate hike," he said. "We think we're still probably at least six months away from that."

"So, bear market rally — play defense here from a risk standpoint," Cronk said.

Markets have gained 什么是熊市(Bear Market)? thanks to some investors' expectations that the Fed will pivot to start cutting interest rates soon. But Wall Street strategists have warned that the US central bank's current hiking cycle won't end until 2023.

Analysts at Goldman Sachs, Bank of America, and HSBC all said last week that the Fed will likely continue to hike until nominal rates are at 4%, around 150 basis points above their current level.

A 'bear market' looms. What 什么是熊市(Bear Market)? exactly does that mean?

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The S&P 500 Index fell into a so-called bear market 什么是熊市(Bear Market)? on Friday. But just what does that mean?

"Bear market" is a term used 什么是熊市(Bear Market)? by investors to describe a steep and sustained market downturn. Technically, it's a drop of 20% or more from recent highs.

Investors commonly apply the phrase to a broad 什么是熊市(Bear Market)? stock index like the S&P 500 or Dow Jones Industrial Average, but it also works 什么是熊市(Bear Market)? for individual stocks.

The tech-heavy Nasdaq Composite stock index is already in a bear market. Wall Street is currently spooked by many factors, including high inflation, rising interest rates, war in Ukraine and the fear of recession.

There isn't anything particularly special about the 20% demarcation line used to define a bear market. It's more a symbol and a psychological hurdle for investors.

"It's a shortcut in language around the financial markets that people use," said Charlie Fitzgerald III, an Orlando, Florida-based certified financial planner, of bear markets. "The bottom line is, it's a tough time."

By comparison, a "bull market" is a period when stocks are surging, which has largely been the case since the Great Recession.

Bear markets are a regular feature of the stock market. Since World War II, there have been nine declines of 20% to 40% in the S&P 500, and three others over 40%, according to Guggenheim Investments. (The analysis doesn't include 2022.)

On average, stocks took 14 months and 58 months to recover, respectively, after those declines. The last bear market occurred in February and March 2020, when the S&P 500 slid 34%. However, stocks rebounded by mid-August.

It's impossible to say how long the current downturn will last, Fitzgerald said. "Human emotions are just a difficult thing to predict," he said.