for stocks, with some investors now bracing for a potential bear market in the benchmark S&P 500 index.
Though a bear market is not a foregone conclusion, signs of souring sentiment are everywhere as the Fed tightens monetary policy to fight the worst inflation in nearly four decades. “The Fed has been as slow to respond to inflation as they’ve ever been, and that is leaving me seriously negative on equities,” said David Wright, co-founder of $9.6 billion asset manager Sierra Investments.
Sameer Samana, senior global market strategist at Wells Fargo, said the S&P 500 has a one in three chance of falling into a bear market if it slipped below what he saw as a technical support level of 4,100, a level it fell below on Monday. Overall, there have been 14 bear markets since 1945, with stocks losing an average of 36% over 289 days, according to data from Hartford Funds.
“There has been a pretty good reset in valuations and investor expectations, and a large degree of Fed tightening is already priced into the market,” he wrote.
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