Although the New York Stock Exchange has started 2022 in the red, the number crunchers in Bank of America fear that the stock market fall is not over. According to Business Insider, the bank’s chief strategist, Michael Hartnett, recently wrote in a note that investors will spend much of 2022 working through news of inflation, interest rates and recession shocks, which could result in stock market declines and increased volatility.
Volatility has already been experienced by several investors. On Wednesday, central bank governor Jerome Powell emphasized that the central bank is not actively considering an interest rate increase of 75 basis points, as some feared, which resulted in the S&P 500 rising 3 per cent while the Nasdaq gained 3.2 per cent. The next day, higher interest rates contributed to the S&P 500 falling 3.6 per cent while the Nasdaq plunged 5 per cent.
19 October?
“Historical development is no guide to future returns, but if that were the case, today’s bear market would end on October 19, 2022 with the S&P 500 at 3,000 and the Nasdaq at 10,000,” Hartnett wrote in the weekly “Flow Show” report.
So far this year, the S&P 500 has fallen 13.5 percent, the Dow Jones is down 9.5 percent while the technology-heavy Nasdaq index has fallen 22.4 percent. This means that the first two are in correction mode while Nasdaq is in a bear market, which is characterized by a significant and continuous decline of at least 20 percent.
Average decrease of 37 percent
According to Bank of America, an average bear market lasts for 289 days and results in an average decline of 37.3 percent. During the last 140 years, there have been 19 so-called bear markets.
Futures indicate that there will be a red start on the New York Stock Exchange on Monday. According to Business Insider, the Dow Jones will open down 1.5 percent, the S&P 500 will fall 1.8 percent and the Nasdaq will start the day with a decline of 2.2 percent.
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