Shares fell slightly on Thursday, as the S&P 500 headed for its sixth consecutive weekly decline and approached the bear market.
Trading was turbulent and after a sharp rise in the S&P 500 ended only 0.1% lower, after falling 1.7% on Wednesday.
The Nasdaq index was also volatile, but changed slightly at the end of the day.
Although this year’s Wall Street sell-off – which comes after the S&P 500 has risen 90 percent in the past three years – began with concerns about rising inflation and interest rates and how the combination could hurt the economy, it took its own life. as investors see each new data point as a cause for concern.
Sales also affected cryptocurrencies such as bitcoin, as well as metals and other commodities such as copper and oil, losses that reflect weakening financial market sentiment, and concerns about the global economy.
The decline left the S&P 500 on the brink of a bear market, Wall Street’s term of a 20 percent drop or more since its last peak. The label aims to emphasize how gloomy the mood among investors has become. By Thursday, the index had fallen about 18 percent from its January 3 peak. The Nasdaq Composite is well in the bear market, falling 29 percent from its highest level in November.
The decline this week came along with new updates on inflation in the United States. The consumer price index rose 8.3 percent in the year to April, the government said on Wednesday, while a measure of prices paid to producers rose 11 percent. Although both measures showed that inflation has cooled slightly compared to the previous month, they remain uncomfortably high.
For equity investors, inflation data is directly reflected in how aggressively the Federal Reserve will raise interest rates: Higher borrowing costs will slow growth and also reduce interest in risky investments.
Analysts say the gloomy mood among equity investors will not change until they deal with when the Fed, which raised its base rate by half a percentage point this month, is expected to do so again when it meets in June and July. , will slow down the increase in speed. This will not be clear until it is certain that inflation has peaked.
“The Fed will want to see clearer evidence that inflation is cooling and higher interest rates are slowing demand before they start thinking about the end of the current cycle of rising interest rates,” wrote Bill Adams, chief economist at Comerica Bank. , in a note to customers on Thursday.
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