Is the bear market set to continue beyond expectation?
It was supposed to be one of the greatest stock market comebacks of all time. But after a summer slump, there’s a nagging fear it might just keep slipping away.
Roughly a year after the S&P 500 Index bottomed out, money managers have seen the stock market’s gains erode on expectations the Federal Reserve will keep interest rates elevated well into next year.
More than 180 stocks in the benchmark are now trading for less than they were 12 months ago, even after the equity market snapped a four-week losing streak with a rally Friday that drove it to a small gain. And in a little over two months, more than a third of the S&P 500’s advance this year has been erased, sapping investors’ confidence and sowing fear that equities have further to fall.
Take Bank of America Corp. strategist Michael Hartnett, who’s advising clients to pull back from US stocks because he’s “convinced the bear market has unfinished business.”
If the selling revives and the S&P 500 falls below 4,200, there are few breakout levels where buyers could safely swoop in, according to technical analysts who monitor daily averages and other metrics as a gauge of stock-market momentum. It closed Friday at 4,309.
That leaves the index vulnerable to sliding to its March lows around 3,900 — or even further. For bulls to have the upper hand once again, the S&P 500 would likely need to hold above its June lows of around 4,350.
Of course, the S&P 500 remains up more than 12% for the year. The recent downturn was driven by the interest-rate risk posed by the persistent strength of the economy, not a slowdown that would batter corporate profits, and Friday’s gain in the face of unexpectedly strong employment data shows the market is proving resilient.
Moreover,
Read more on investmentnews.com
