A few weeks back, we started to hear declarations that a new bull market was underway. Now … not so much.
Driving the news: Stocks slumped again on Monday, as the market momentum that drove a rally through much of the summer continued to ebb.
Flashback: After the ugliest start to a year since 1970, the S&P 500 was down as much as 23% this year by mid-June.
- Stocks then rallied hard for two months, cutting those losses to about 10%.
- The Nasdaq soared over 20% at the same time, prompting the Wall Street Journal to declare a new bull market had begun for the tech-heavy index.
Between the lines: The wind in the market’s sails over the summer came from a sharp tumble in long-term interest rates — essentially the yield on the U.S. 10-year Treasury note — as oil prices and other inflationary pressures started to relax a bit.
- If you’re interested in how lower rates buoy stock prices, see here and here.
Reality check: More recently, rates have been rising again, as the economy has stayed fairly strong and Fed chair Powell has warned that the central bank may keep fighting higher inflation for the foreseeable future — sending stocks back down.
- The S&P 500 is now down more than 15% for the year.
- That 20% Nasdaq rally has now shrunk to 13%.
Matt’s thought bubble: That doesn’t look like a bull market to me.