The Standard & Poors 500 Index plummeted 13 percent from January to April of 2022. This is the worst opening third-of-the-year for the stock index since 1939. Of course, trying to compare the stock market of today with one from more than 80 years ago is not exactly equivalent. Indeed, 83 years ago, the S&P consisted of only 90 companies.
Still, it wouldn’t be fair to simply discount what is happening with the S&P 500. This is particularly true when compared against the other major indexes, which are also struggling. For one, the Dow Jones Industrial Average has fallen 9 percent and the tech-laden Nasdaq Composite plummeted 21 percent over the same time frame.
Now, there is a bit of an old Wall Street strategy that suggests investors should “sell in May and go away”, which means that bullish investors sell in the Spring to take a break in the summer, which brings some of the market value down going into the winter holiday. So it is not like these numbers are unique, necessarily.
However, the notable sell-off we are seeing today may be different from past trends. Some analysts note that this push may have already happened in a kind of panic-induced frenzy thanks to growing market uncertainty.
It is of great concern, for example, that the Federal Reserve will soon initiate a rate hike in an aggressive attempt to fight escalating inflation. In addition, new Covid variants are slowing the economic recovery in the US—and new lockdowns in some parts of China only complicate this matter. And then, of course, there is the Russian invasion of Ukraine: all of these variables have massively contributed to recession concerns.
But amidst all of the concern, some strategists remain optimistic. As thoroughly as analysts follow market trends, the simple rise and fall of index value does not always tell us everything. Primarily, the current state of the market does not necessarily reveal any data on progress in restoring the supply chain or how anti-inflationary policies will help Americans dig out of the recession; or how energy market resilience and a healthy job market will relieve some of the pressures.