We're officially half-way through 2022, and so far, well... let's just say if this year were a movie, now's about the time I'd be storming out and demanding a refund. What kind of sick, depraved writers would come up with this trash?
Anyway, in the spirit of taking time to reflect on where we've been and where we're going from here, my colleague Nicole Goodkind has goodkindly taken a look at how Wall Street is faring. Short answer: terribly. But the longer answer is more fun, so let's dive in.
Here's the deal: The first half of the year has been the worst one for the S&P 500, the broadest measure of US markets, in more than 50 years.
The index is down more than 20% for the year, having entered a bear market two weeks ago. All three major US indexes — the Dow, Nasdaq and S&P 500 — ended this month and quarter in the red.
Markets are easily roiled by uncertainty, and 2022 has been a messy drama queen from the get-go, with three major events keeping investors on edge:
- Russia's war against Ukraine (and all the supply-side shocks that's created for oil and commodities)
- Covid-19 lockdowns in China, which hamstrung manufacturers added more snags in global supply chains
- And everyone's favorite: inflation. The relentless rise in prices has forced the Fed to go HAM on interest rate hikes.
That unholy trinity of economic forces has made recession forecasting something of a national sport. Investors are headed for the exits: The S&P 500 has lost $8.2 trillion in total dollars since the start of the year.
So yeah, it's not good.
But hey, it's almost the holiday weekend and I feel like looking on the bright side, so here's a dose of optimism:
What we know from history is that the market always goes back up. Eventually.
And as Nicole notes, there is historically little correlation between the S&P 500's first and second half of the year performance.
In 1970, for example, it fell 21% in the first six months, then rebounded to gain 27%.
Plus, US stocks typically go up around 15% on average one year after landing in bear territory. The last three bear markets took only four to five months to recover losses.
Bottom line: Hang in there, folks.
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