In Markets "In a Nutshell"

Markets “In a Nutshell” for October 17, 2022

Investment Week at a Glance

Stocks finished lower for the week.  The Dow Jones Industrial Average rose 1.20%, the S&P 500 was down 1.60%, and the NASDAQ fell 3.10%. Foreign stocks (MSCI EAFE) were also down, falling 2.50%.  Bond prices were down for the week, with the 10-year U.S. Treasury ending the week at 4.02%.  (Data source: Wall Street Journal)

Market Swings Continue

Last week stocks continued their wild ride as new inflation data came in with prices increasing by 0.4% month over month which was worse than expected. This caused markets to open up on Thursday down over 2%, but by the end of the day, markets were up nearly 3%. This was the 3rd largest intraday point swing in the S&P 500 history swinging 193 points from open to close. Although markets had a good Thursday, Friday was the exact opposite with the S&P 500 having a 3% intraday swing to the downside. Although market volatility has been prevalent this year, these swings are much bigger than anything we have seen so far and may continue as investors continue to price in higher rates and when rates will stop rising. Investors would have hoped that by now the Fed rate hikes would tame inflation, but it does not seem we are there yet giving worry to investors that rates will continue to rise.

Equities After Bear Markets

When looking at how markets perform after the last 7 bear markets, on average the market rebounds by 47% in the 1st year from the bottom of the market. In the first 2 years after the market bottom equities rebound 74%. This is an important reminder of why investors should stick to their plan and not change their strategy, so they don’t miss the gains that come after these bear markets. When looking at what performs the best after bear markets, the top performers are typically US equities and emerging market equities. The bottom performers have been government bonds, international bonds, and cash. While bear markets are never fun, it does give investors an opportunity to get into the market at lower prices than just months ago and rebalance their portfolios.



When was the longest bear market for the US stock market? (Scroll Down for Answer)

  1.     1961-1962
  2.     1973-1974
  3.     1980-1982
  4.     2000-2002




























Answer below.



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4)    2000-2002.  This bear market lasted for 30 months making it the longest bear market in US history.  The tech bubble coupled with 9/11 caused markets to decline for this long as those 2 events shocked markets around the world.