US stock market performance – S&P 500 and Nasdaq in bear market at halfway point of 2022

Nasdaq 100 is now trading at about 19.2 times estimated earnings, well below a 2020 peak of above 31, and under its 10-year average of about 20.1.

US stock market, performance, S&P 500, Nasdaq, bear market, Wall street, buy-the-dip strategy
S&P 500 is also in a bear market territory for the second time since 2020, having plunged over 20 per cent from its peak.

Wall street first half performance of 2022 has been not up to the mark and has never been seen since the 1970s. S&P 500 and Nasdaq 100 were down by almost 20.58 per cent and 29.51 per cent respectively as on June 30, 2022.

Most of the stocks in the tech-heavy Nasdaq 100 Index have tumbled heavily since January this year. Will it be on track for its biggest calendar-year decline ever remains to be seen. The Nasdaq 100 is now trading at about 19.2 times estimated earnings, well below a 2020 peak of above 31, and under its 10-year average of about 20.1.

The energy sector — a leader at the beginning of 2022 — was the biggest laggard in the S&P 500, falling 17% in June while still holding onto gains of more than 29% for the year-to-date. And while all 11 major S&P 500 sectors closed out June with losses, the defensive healthcare, consumer staples and utilities sectors typically seen as more resilient in a downturn outperformed.

‘Buy-the-dip’ strategy may have paused with most investors as the bear market rallies are being seen as ‘sell-the-rally’ mode. S&P 500 is also in a bear market territory for the second time since 2020, having plunged over 20% from its January peak.

However, there could be a silver lining if history suggests anything. The US equity benchmark lost 21% in the first half of 1970, during a period of high inflation that the current environment has been compared with. It surged 27% during the last six months of that year.

Presently, inflation, rate hikes, recessionary fears have gripped the market sentiments. How much of rate hikes before inflation gets tamed remains to be seen. New data reflected still-elevated inflation rates and a dip in real consumer spending which is also fulessing recessionary fears and a stagflation environment.

Crude futures are hovering around $105 per barrel and closed out its first monthly decline since November 2021. Bitcoin prices sank below $19,000 as the nearly 60% drawdown in Bitcoin since the end of March was the largest since the third quarter of 2011. Mark Mobius, who co-founded Mobius Capital Partners after spending more than three decades at Franklin Templeton Investments has a take on Bitcoin prices co-relating it to the stock market price movement. “Cryptocurrencies are a measure of investor sentiment. “Bitcoin goes down, the next day the Dow Jones goes down. That’s the pattern you get. That shows that Bitcoin is a leading indicator,” says Mobius.

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