IS 2022 A BEAR OR BULL MARKET

The good news is that the stock market is likely to fully recover from this bear market and, as it has done since its inception, go on to new heights. But it could be a bumpy ride for anxious investors who will likely have to endure more market sell-offs this year. If you’ve come this far during this tumultuous market, you have more reasons to stick with it than to consider jumping to the sidelines.

The S&P 500 index closed out the first half of 2022 with its worst start in 50 years. On June 13, the index breached negative 20% from its previous high, officially entering bear market territory for the second time in two years.Aug 11 (Reuters) – The U.S. stock market’s rebound in recent weeks has analysts and investors questioning whether 2022’s deep downturn has ended, but how to spot an expiring bear market or a new bull market is not something everyone on Wall Street agrees on.Equities have rebounded thanks to better-than-expected corporate earnings and bets the worst of soaring inflation may be over. The Nasdaq (IXIC) index’s drop of about 0.6% on Thursday left the tech-heavy index up 20% from recent low on June 16, while the S&P 500 (SPX) has also rebounded in recent weeks, now up 15% from its recent low in June.

Most investors consider stocks to be in a bear market when they’re down at least 20% from the most recent high. By this definition, the S&P 500 hasn’t been in a bear market for nearly two months. The Nasdaq Composite Index remains in bear market territory, but just barely (no homophone-related pun intended).However, some think that the overall stock market is still in a bear market. They fear that recent gains will turn out to be nothing but a head fake.Are we in a new bull market or just a bear market bounce? Here’s what history shows.

U.S. stocks, as measured by the benchmark S&P 500 index, officially fell into “bear market” territory in June 2022. This represents a decline that exceeds 20% of the peak value of the index. The technology-heavy NASDAQ Composite Index (which includes about 3,000 common equities) and the Russell 2000 Index of small-cap stocks have also experienced bear markets in 2022.Stock market downturns such as these occur periodically, and for various reasons. Sometimes the changes are related to excessive market valuations after an extended bull market. In other cases, they may be due to external events which overwhelm other fundamental factors that traditionally drive stock market performance.“The market’s downturn this year can be attributed to the rising level of uncertainty for investors,” says Rob Haworth, senior investment strategy director at U.S. Bank. Three key events contributed to the environment, including persistently high inflation, a dramatic change in monetary policy by the Federal Reserve and the economic fallout from Russia’s invasion of Ukraine.Stocks rebounded in July after reaching their June lows but major indices retreated again beginning in August, hitting new lows in September as investor fears of a recession rose. Stocks rebounded solidly in October, but market volatility remains a staple of the current investment environment. Year-to-date through October, the S&P 500 was down nearly 18% (total return).