S&P 500 nears bear market territory as stock prices tumble worldwide

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Wall Street is tumbling even more today. The S&P 500 is down more than 20% from its record, amid fears that a recession is more likely given how unshakable inflation has become.

It’s all a whiplash turnaround from earlier in the pandemic, when central banks worldwide slashed rates to record lows and made other moves that propped up prices for stocks and other investments in hopes of juicing the economy.

The gap between the two-year and 10-year yields is also narrowing, a signal of increased pessimism about the economy in the bond market. If the two-year yield tops the 10-year yield, some investors see it as a sign of a looming recession. In Europe, Germany’s DAX lost 2.6%, and the French CAC 40 fell 2.9%. The FTSE 100 in London dropped 1.8%.

The last bear market wasn’t that long ago, in 2020, but it was an unusually short one that lasted only about a month. The S&P 500 got close to a bear market last month, briefly dipping more than 20% below its record, but it didn’t finish a day below that threshold.This would also be the first bear market for many novice investors who got into stock trading for the first time after the pandemic, a period when stocks largely seemed to go only up.

With soaring price tags at stores souring sentiment for shoppers, even higher-income ones, Wilson said in a report that “the next shoe to drop is a discounting cycle” as companies try to clear out built-up inventories.

 

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