S&P 500, Dow 30 and Nasdaq, the three leading US stock market indices have been under pressure since 2022 began. For the first time since late March 2021, the S&P 500 ended below 4,000 to close the Monday session at 3,991.24 while the Nasdaq closed at its lowest level since November 2020.

S&P 500, Dow 30 and Nasdaq Composite were down by 3.2 per cent, 1.99 per cent and 4.29 per cent respectively.

As Dennis Gartman, the former publisher of the influential “The Gartman Letter” and chairman of the University of Akron Endowment puts it across in a Bloomberg Radio show – “US stocks are in downtrend and one day there will be a violent downmove of 5-6 per cent and that will be the final selling pressure that will end the bear market.” If that happens and will that be the right time to buy remains to be seen. Gartman, incidentally, has been bearish since January 5 this year.

The selloff in the equity market is perhaps on the back of rising interest rates which tends to pull the valuations of mega tech stocks down. The era of easy liquidity witness since March 2020 seems to be voer and the easy money environment looks to be fading away.

Talking of heavyweights stocks, Apple (AAPL) share price saw a decline of 3.3% while Microsoft Corp (MSFT) dropped 3.7% and Tesla Inc (TSLA) fell 9.1%. Taken together, some of the world’s largest technology companies have already shed over $1 trillion in value in just three trading sessions.

After the Federal Reserve hike in interest rate by 0.5 per cent, the investors are awaiting the steps the central bank is expected to take to tame inflation in its next FOMC meeting. The talk of recession amidst the high inflationary environment, Ukraine’s invasion of Russia, oil prices and supply chains issues is already underway.

Long term investors know that the equity market is not a one-way street and there will be ups and downs, corrections, and even market crashes. However, as data shows, equities tend to drift upwards over the long term. Buying stocks when valuations are low is possibly a better approach for long term wealth accumulation. With changing dynamics in the economy, it is equally important to select the right stocks and hold on to them for better fortunes.