Bloody Friday, Large caps off again

Biggest S&P 500 losers during bear

The S&P 500’s tumble into a bear market comes as the U.S. has been dealing with inflationary pressures not seen in decades. Those have been worsened by a surge in energy prices — which was exacerbated in large part by the start of the Ukraine-Russia war.

The jump in inflation then led to the Federal Reserve hike rates in March for the first time in more than three years. Earlier this month, the central bank got even more aggressive and hiked rates by half a percentage point.

At first, the sell-off losses were centered around highly valued growth and technology stocks. However, the sell-off eventually broadened to other parts of the market. Through midday Friday, energy was the only positive S&P 500 sector year to date.

Biggest Nasdaq losers in the bear market

Then this week, poor quarterly reports and outlooks from Walmart and Target raised concern over companies’ abilities to deal with inflation and consumers’ willingness to pay higher prices — putting even more pressure on the S&P 500.

“At some point the market will turn, but it won’t be until these winds are shifting, inflation is coming down and consumers are feeling good about spending money again like they want to and are used to. These are pretty long cycles,” said Johan Grahn, head of ETF strategy at Allianz Investment Management.

The March 2020 bear market lasted just 33 days before the S&P 500 ended up rebounding to record highs again as investors bet on internet companies which thrived during the pandemic.