More than $7 trillion has been wiped out from the stock market this year

Markets / May 12, 2022 / DRPhillF / 0

The crash in 2022 wiped out more than $7 trillion in market value from the S&P 500’s blue-chip stocks. The index is down nearly 19% since the end of December. The Dow, which fell about 450 points Thursday, was down about 14% as well.

Tech stocks have been hit particularly hard. The Nasdaq is down more than 28.5% this year, putting it deep into bear market territory. Nearly $3 trillion of the S&P 500’s market cap decline comes from the technology sector.

The rapid decline is ringing alarm bells on Main Street as well, with fears that the US economy may lose steam after a strong recovery from the depths of the short recession caused by the pandemic.

According to data from research firm Bespoke Investment Group, the Nasdaq has fallen more than 20% in the past 30 trading days. A decline of this magnitude has occurred only 11 times before…and nine of those declines were “recession-related,” according to Bespoke.

Analysts detailed in another report earlier this week said the Nasdaq 100, or QQQs, are on track for their worst start to any year ever.

However, there are still hopes for a bottom near the horizon. Bespoke analysts said that “prices can remain oversold… for an extended period of time, but they don’t stay that way forever.”

Investors are waiting for the so-called capitulation, the moment when everyone seems to have finally thrown in the proverbial towel. When sentiment appears to be at its lowest, it might be a good time to start buying again.

The market may be around those levels. The CNN Business Fear and Greed Index, which measures seven indicators of market sentiment, is now in the area of intense fear. The indicator moves from 0-100 and lower levels are associated with panic in the market. The indicator is currently at level 6.

investment, More than $7 trillion wiped off the stock market this year - CNN