Bidenomics: S&P 500 Falls 20% Below All Time High, Enters Bear Market

U.S. stocks fell to new lows for the year on Friday on rising fears of a recession with the relentless market sell-off now pushing the S&P 500 20% below its all-time high in January.

The S&P 500 traded about 1.4% lower on Friday, putting it 20.1% below its intraday record reached in January. To some that puts the benchmark in bear market territory, but there is no official designation. The benchmark would need to fall a little further to mark a 20% decline on a closing basis, which many strategists say marks a real bear market. At last count, the S&P 500 was down 19.8% from its record January close.

The Dow fell 347 points, or 1.1%, with the benchmark losing steam after a strong open and bringing its total loss from its record to 16%. The Nasdaq Composite dipped 1.9% and is already deep in bear market territory, trading 31% off its highs.

For the week, the Dow is off by 4% for what would be its first 8-week losing streak since 1923. The S&P 500 is also down 4% for the week, while the Nasdaq is off by 5%. Both indexes are on pace to fall for a seventh-straight week.

“Stocks are still liberally priced and the psychology that drove them upward for a decade has turned negative,” wrote George Ball, chairman at investment firm Sanders Morris Harris. “The average bear market lasts a year (338 days, more precisely). This downturn has run for only one-third of that, so it probably has more downside room to run, albeit punctuated by interim rallies.”

Stocks were under pressure again Friday as concerns of rising interest rates and an aggressive stance against inflation by the Federal Reserve had investors worried the economy could fall into a recession.

Wall Street dumped shares of semiconductor stocks Friday. Shares of Nvidia fell 5%, Advanced Micro Devices declined 4%, and Marvell Technology slipped more than 2%.

Bank stocks also declined. Shares of JPMorgan Chase dropped 1% and Bank of America fell nearly 2%.

Elsewhere, shares of Deere also fell 7% on Friday after the heavy equipment maker reported a revenue miss. However, the company beat on earnings estimates and raised its annual profit outlook. Shares of Caterpillar also declined more than 3%. Industrials like Deere and Caterpillar are seen as barometers for the global economy.

Retailers also continued to get hit this week after the most recent quarterly figures from Walmart and Target raised concerns about a weakening consumer base and the ability for companies to deal with decades-high inflation. Target and Walmart are down sharply after posting their quarterly results this week.

“When you can’t hide in Hershey (205), you pretty much can’t hide. The idea of a 25% hit to Target (153) is one thing, but hits to Microsoft (253) and Apple (137) may have done greater damage to the investor psyche. It’s that helpless, all is lost feeling that gets you to a give up or capitulation phase, and after all that’s what lows are about – the selling, not the buying,” wrote Frank Gretz, technical analyst at Wellington Shields.

Ross Stores was the latest retailer to fall after posting earnings. The stock was down 20%. CEO Barbara Rentler said that “following a stronger-than-planned start early in the period, sales underperformed over the balance of the quarter.”

Meanwhile, the Federal Reserve has signaled it will continue to raise interest rates as it tries to temper the recent inflationary surge. Earlier in the week, Chair Jerome Powell said: “If that involves moving past broadly understood levels of neutral, we won’t hesitate to do that.”

That tough stance on monetary policy has stoked concern this week that the Fed’s actions could tip the economy into a recession. On Thursday, Deutsche Bank said the S&P 500 could fall to 3,000 if there is an imminent recession. That’s 23% below Thursday’s close.

Stocks have struggled to find their footing for roughly two months. The Nasdaq is 27% below its record and the Dow is off by 14% from its high.

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Correction: The Dow was on pace for its first eight-week losing streak since 1923. A previous version misstated the year.