U.S. stocks fell Monday as investors resumed the selloff that pushed the S&P 500 last week to its sixth consecutive weekly loss.
The broad stock market index 500 fell 0.3% in early trading, the Dow Jones Industrial Average lost 0.3% and the technology-heavy Nasdaq Composite Index dropped 0.3%.
The S&P 500 suffered its longest weekly losing streak since June 2011, even after posting gains on Friday, and is flirting with bear market territory.
The index would need to lose about about 200 points from Friday’s closing level to hit the short-hand definition of a bear market, which is a 20% drop from a recent high. But it in practice the markets are already acting like a bear market has arrived, said City Index market analyst Fawad Razaqzada.
The lack of follow-through from Friday’s rally is a tell-tale sign of a bear-market mentality, he said. Investors are grappling with so many issues—the Russia-Ukraine war, Federal Reserve policy, inflation, China’s economic slowdown—it’s hard for them to justify holding anything for too long, he said. Most fundamentally, he said, investor confidence has been badly shaken by the selloff.
“We are in a bear market, no question about that,” Mr. Razaqzada said.
Investors, worried that the Federal Reserve has been too late to spot the risks from soaring inflation, fear the central bank will move too aggressively to fight it, a mistake that could tip the economy into a recession.
The resulting selloff, which has been compounded by the war in Ukraine and Covid-19 lockdowns in China, has been broad, affecting most assets from cryptocurrencies and stocks to government bonds, leaving investors unsure of where to seek safety.
After weeks of losses, some investors are holding on to stocks, or buying more, hoping declines are reaching their nadir. Others are settling in for a protracted period of volatility.
“We are moving into a more challenging time for markets. We need to see signs that inflation is not just peaking but actually decelerating before you find a sustainable bottom in the market. That is going to take at least a couple of months,” said
chief investment officer at CIBC Private Wealth.
“That doesn’t mean we won’t have counter-rallies higher from day to day, but I think this is a long, drawn-out process and it is largely data-driven,” he said.
Among individual stocks,
shares fell 5.1% after
on Saturday said the company’s legal team accused him of violating a nondisclosure agreement. Mr. Musk Friday said that his $44 billion acquisition of the social-media company was “on hold,” sending the company’s shares down nearly 10%.
jumped 9.3% after The Wall Street Journal reported that
plans to launch a hostile takeover attempt of the discount carrier. JetBlue shares were down 4%.
In bond markets,…
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