Investor Resources

The first leg of the bear market ended in mid-June. We believe the current bear market rally should end shortly, and declining earnings expectations and recession fears will drive the market lower.

The stock market decline continued in May, and the S&P 500 “officially” entered a bear market on May 20th by falling more than 20% from its January all-time high. In mid-June, stocks and bonds fell sharply as inflation spiked to 8.6%, and the Fed surprised financial markets by increasing interest rates by 0.75% (the largest increase since 1994) at it’s June 15th meeting. Previously, Chair Powell stated, “a 75 basis point increase is not something the committee is actively considering.”

• After a difficult Q1, the selloff in the financial markets accelerated in April because of the extended war in Ukraine, the supply chain issues related to the lockdowns in China, and the Fed’s “promise” to raise interest rates quickly to curb inflation. Additionally, stocks suffered in April as disappointing earnings from Netflix and Amazon indicated that surging inflation could be hurting consumers.

• Financial markets declined sharply during the first quarter of 2022 because of soaring inflation, the Fed’s hawkish pivot, and Russia’s invasion of Ukraine. While stocks had their first quarterly loss since the pandemic bear market

Stocks fell to a nine-month low as Russia invaded Ukraine, and investors worried about inflation, which surged to the highest level since January 1982. Since its January 4th all-time high, the S&P 500 declined by 14.6%, while the NASDAQ 100 and Russell 2000 fell by more than 20% peak to trough. We still believe that stocks offer a poor risk-reward and are in a bear market.

In January, the S&P 500 had its worst month since the pandemic crash of March 2020 because inflation surged to a forty-year high, and the Federal Reserve announced they were prepared to tighten monetary policy more aggressively if inflation persists. We believe we are on the cusp of a bear market.