Stocks tumble on recession fears, with the S&P 500 nearing a bear market


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The S&P 500 just fell into a bear market for the first time since the pandemic. Here's what to know about this vicious part of the stock-market cycle.​

  • The S&P 500 briefly entered bear market territory on Friday for the first time since March 2020.
  • A bear market is technically defined as a decline of at least 20% in the stock market from its peak.
  • Here's everything you need to know about this vicious part of the stock market cycle.

The S&P 500 briefly entered bear market territory on Friday for the first time since March 2020 as investors continue to assess record inflation, surging interest rates, and its impact on consumers and corporate profits.

The S&P 500 is now down more than 20% from its peak reached at the start of the year, catching up with the Nasdaq 100 which officially entered bear market territory earlier this month. The stock market's sell-off was solidified this week following the poor earnings from big-box retailers like Target and Walmart.


Given the volatile regime the stock market has entered, it's good to know how stocks might act during this period, based on previous bear market data compiled by LPL Research. Here's everything you need to know about this vicious part of the stock market cycle.
 

Stocks head for another potentially treacherous week, as a slew of retailers report earnings​



If there’s more bad news from retailers in the coming week, that could be a negative catalyst for an already cranky stock market.

Market pros are watching for more signs that stocks could be bottoming, though strategists say that is a tricky prospect and there could be false signals.

The S&P 500, on an intraday basis Friday, broke through its prior low to reach bear market levels - trading more than 20% below its record high reached in January. But it did not close there. Instead, it reversed the day’s steep losses and ended the day just slightly positive.

“It is a process. ... This week was scary in breaking through last week’s bottom. These things take time,” said Julian Emanuel, head of equity, derivatives and quantitative strategy at Evercore ISI.

Emanuel said that taking out the lows could signal a buying opportunity, and that the market is in a bottoming process. “Looking medium to longer term, toward the end of the year, we continue to see higher stock prices ahead,” he said.

Stocks were lower in the past week, despite the fact strategists had been expecting the oversold market to bounce. The market initially rallied, until earnings misses from Walmart and Target blew up the gains.
 
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