cloudyn.png
Wednesday August 17th, 2022 3:05AM

Wall Street nears bear market at the end of a bruising week

By The Associated Press
Related Articles
  Contact Editor

NEW YORK (AP) — Another fall for stocks on Friday has the S&P 500 flirting with a 20% drop from its peak set early this year, putting it within the grasp of what Wall Street calls a bear market.

The index that's at the heart of most workers' 401(k) accounts was down 0.4% for the day in afternoon trading and on pace for its seventh straight losing week, which would be its longest since 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 U.S. 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.

If the S&P 500 finishes the day 20% or more below its record, it would mark the first bear market since early 2020, when the pandemic sparked an unusually brief downturn that sliced 34% off the S&P 500. It gave way to a powerful run where the S&P 500 more than doubled, drawing in a new generation of investors who met seemingly every wobble with the rallying cry to “Buy the dip!”

“I think plenty of investors were scratching their heads and wondering why the market was rallying despite the pandemic," said Brian Jacobsen, senior investment strategist at Allspring Global Investments. “Now that the pandemic has hopefully mostly passed, I think a lot of investors are kicking themselves for not having gotten out on signs that the economy was probably slowing and the Fed was making its policy pivot.”

With inflation at its highest level in four decades, the Fed has aggressivly flipped away from keeping interest rates super-low in order to support markets and the economy. Instead it's raising rates and making other moves in hopes of slowing the economy enough to tamp down inflation. The worry is if it goes too far or too quickly.

“Certainly the market volatility has all been driven by investor concerns that Fed will tighten policy too much and put the U.S. into a recession,” said Michael Arone, chief investment strategist at State Street Global Advisors.

The S&P 500 was 0.4% lower, with 20 minutes left to go in the trading day, or 19% below its record set on Jan. 3. Earlier in the day, it was down more than 20%. The Dow Jones Industrial Average fell 364 points, or 1.2%, to 30,888 and the Nasdaq was 2%.

Bond yields fell as recession worries pushed investors into Treasurys and other things seen as safer. The yield on the 10-year Treasury note, which helps set mortgage rates, fell to 2.78% from 2.85% late Thursday.

Inflation has been painfully high for months. But the market's worries swung even higher after Russia's invasion of Ukraine sent prices spiraling further at grocery stores and gasoline pumps, because the region is a major source of energy and grains. The world's second-largest economy, meanwhile, has taken a hit as Chinese officials locked down key cities in hopes of halting COVID-19 cases. That's all compounded with some disappointing data on the U.S. economy, though the job market remains hot.

Adding pressure onto stocks have been signs that corporate profits are slowing and may finally getting hurt by inflation. Retail giants Target and Walmart both had warnings this week about inflation cutting into finances. Discount retailer Ross Stores plunged nearly 23% on Friday after cutting its profit forecast and citing rising inflation as a factor.

“The latest earnings from retail companies finally signaled that U.S. consumers and businesses are being negatively impacted by inflation,” Arone said.

Although its source is different, the gloom on Wall Street is mirroring a sense of exasperation across country. A poll from The Associated Press-NORC Center for Public Research released Friday found that only about 2 in 10 adults say the U.S. is heading in the right direction or the economy is good, both down from about 3 in 10 a month earlier.

Much of Wall Street's bull market since early 2020 was the result of buying by regular investors, many of whom started trading for the first time during the pandic. Alongside many cryptocurrencies, they helped drive darlings like Tesla's stock higher. They even got GameStop to surge suddenly to such a high level that it sent shudders through professional Wall Street.

But these traders, called “retail investors” by Wall Street to differentiate them from big institutional investors, have been pulling back as stocks have tumbled. Individual investors have turned from a net buyer of stocks to a net seller over the last six months, according to a recent report from Goldman Sachs.

Robinhood Markets, whose easy-to-use trading app helped draw millions of new investors, has seen its huge growth in revenue reverse amid fewer trades by nervous customers, particularly those with smaller balances.

  • Associated Categories: Associated Press (AP), AP National News, AP Online National News, Top General short headlines, AP Business, AP Business - Economy, AP Business - Financial Markets
© Copyright 2022 AccessWDUN.com
All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.
Trump pays $110K fine, must submit paperwork to end contempt
Former President Donald Trump has paid the $110,000 in fines he racked up after being held in contempt of court for being slow to respond to a civil subpoena issued by New York’s attorney general
1:05PM ( 4 minutes ago )
Wall Street nears bear market at the end of a bruising week
Stocks are falling on Wall Street again on Friday and are headed for another week of declines following a massive pullback two days ago
1:03PM ( 7 minutes ago )
Police: Chicago shooting leaves 2 people dead, 7 wounded
Authorities say two people were fatally shot and seven more were wounded when a man involved in a fight opened fire in downtown Chicago
12:48PM ( 22 minutes ago )
Associated Press (AP)
Biden: SKorean chip plant a model for deeper ties to Asia
President Joe Biden is visiting a South Korean computer chip factory that is the model for a similar plant to be built in Texas
12:07PM ( 1 hour ago )
Elon Musk visits Brazil's Bolsonaro to discuss Amazon plans
Tesla and SpaceX chief executive officer Elon Musk has met with Brazil’s President Jair Bolsonaro to discuss connectivity and other projects in the Amazon rainforest
11:51AM ( 1 hour ago )
Stocks fall on Wall Street at the end of a bruising week
Stocks fell in late morning trading on Wall Street Friday and are headed for another week of declines following a massive pullback two days ago
11:37AM ( 1 hour ago )
AP National News
Bach says Russia ban is to protect athletes, not punish them
International Olympic Committee president Thomas Bach says Russian athletes and officials who have been banned from international sporting events because of the war in Ukraine are being protected rather than punished
9:08AM ( 4 hours ago )
'How dare you!': Grief, anger from Buffalo victims' kin
Relatives of the 10 Black people massacred in a Buffalo supermarket are pleading with the nation to confront and stop racist violence
8:41AM ( 4 hours ago )
Biden in Asia: New friends, old tensions, storms at home
President Joe Biden hopes to use his visit to Asia to confirm his belief that long-standing friendships can afford to become even friendlier — and pay dividends
8:36AM ( 4 hours ago )
Top General short headlines
The AP Interview: New Pakistani FM seeks better ties with US
Pakistan's new foreign minister says his country has resumed engagement with the United States after year of strained relations under former Prime Minister Imran Khan
11:46AM ( 1 hour ago )
Live updates | Italy submits peace plan for Ukraine to UN
Italy has submitted a peace plan for Ukraine to U.N. Secretary-General Antonio Guterres
11:42AM ( 1 hour ago )
Netflix pays $59 million to settle tax dispute in Italy
Netflix has agreed to pay more than $59 million to settle a tax dispute in Italy
11:15AM ( 1 hour ago )
AP Business
N Ireland party leader pans Pelosi's warning on Brexit terms
U.S. House Speaker Nancy Pelosi is facing criticism from the leader of Northern Ireland’s biggest unionist party after saying Congress won’t approve a trade deal with the U.K. if Britain scraps the agreement governing post-Brexit trade on the Irish island
9:37AM ( 3 hours ago )
Live updates | Russia says fighters surrender at steel plant
Russia’s defense minister says 1,908 Ukrainian fighters who had been holed up at the Azovstal steelworks, the last pocket of Ukrainian resistance in the port city of Mariupol, have surrendered so far
9:07AM ( 4 hours ago )
Japan welcomes new US Indo-Pacific economic initiative
Japan is welcoming a new U.S. economic initiative for the Indo-Pacific that President Joe Biden is expected to roll out during a visit to Tokyo next week because it demonstrates American commitment to a regional economic order that is not just about market access
9:06AM ( 4 hours ago )
AP Business - Economy
Stocks end lower, nearing but not quite in a bear market
Stocks ended another volatile day lower on Wall Street Thursday, bringing the market closer to its first bear market since the beginning of the pandemic
4:47PM ( 20 hours ago )
Stocks waver on Wall Street, hover close to bear market
Stocks wavered in afternoon trading on Wall Street Thursday as persistently high inflation continues to weigh on the economy and keeps major indexes mired in a deep slump
3:27PM ( 21 hours ago )
EXPLAINER: ESG investing and the debate surrounding it
After starting as a niche corner of the finance world, ESG investing has since exploded to become a major force on Wall Street _ and the latest front in the nation’s cultural schism
2:22PM ( 22 hours ago )
AP Business - Financial Markets
Police: Chicago shooting leaves 2 people dead, 7 wounded
Authorities say two people were fatally shot and seven more were wounded when a man involved in a fight opened fire in downtown Chicago
12:48PM ( 22 minutes ago )
Mining companies back away from Brazil's Indigenous areas
Some of the world’s biggest mining companies have withdrawn requests to research and extract minerals on Indigenous land in Brazil’s Amazon rainforest, and repudiated Brazilian President Jair Bolsonaro’s efforts to legalize mining activity in the areas
12:45PM ( 25 minutes ago )
West rushes more aid as Mariupol teeters and fighting rages
Ukrainian authorities say that their troops repelled a Russian attack in the east, as Moscow struggles to gain ground in the region that is now the focus of the war
12:15PM ( 55 minutes ago )
France's Macron appoints new government for 2nd term
French President Emmanuel Macron has announced a new Cabinet
12:13PM ( 57 minutes ago )
African scientists baffled by monkeypox cases in Europe, US
Scientists who have monitored numerous outbreaks of monkeypox in Africa say they are baffled by the disease’s recent spread in Europe and North America
12:12PM ( 57 minutes ago )