There will be no “V-bottom” in this market
On Friday, the Standard & Poor’s 500 broke a 7-week losing streak, the longest the index had recorded since 2001.
Concerns about a slowing economy and tighter monetary policy from the Federal Reserve were at the heart of the decline. Last week’s rebound has likely made some investors question whether the worst is over for stocks, and asking if we’d like to see a comeback similar to what followed the pandemic-induced bear market in 2020.
However, no strategist sees the components of this type of rebound in the current environment.
“There’s no V-shaped bottom here,” Michael Antonelli, managing director and market strategist at Baird told Yahoo Finance Live on Friday.
“The V-shaped bottoms are just made up that the Fed has gotten very friendly, which is putting in a tailwind [behind the market]And the [or] Antonelli said that some kind of financial motive. Neither of those happened.
Last week, the minutes of the Fed’s latest policy meeting suggested that after raising the benchmark interest rate by 0.50% in early May, the central bank is set to do the same in June and July.
If history is any guide, says Antonelli, expect the current semi-bear market to last for about a year.
“If you’re looking for a peak to a low, the average bear market is about 338 days, just under a year,” Antonelli told Yahoo Finance. “If you’re talking about peak, to trough, [and] Back at the peak, which is about 600 days, which is just over a year and a half. It will take some time to get over this.”
Year-to-date, the S&P 500 (^GSPC) is down nearly 13%, the Nasdaq (^IXIC) is down more than 22%, and the Dow (^DJI) is down more than 8%.
In the longer term, however, history suggests that US stocks tend to stay resilient and bounce back after sharp declines. After all 11 of the worst years in history, Antonelli notes that the index was higher after five years.
Enas is a market reporter covering stocks. Follow her on Twitter at Tweet embed
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