All three major indices on the Wall Street Stock Exchange ended the week’s first trading day in red.
- The wide S&P 500 fell by 0.30 per cent to 3,900.11.
- The tech index Nasdaq ended down 0.72 percent to 11,524.55.
- The industry index Dow Jones ended down 0.20 percent to 31,438.26.
The ten-year US government bond yield ended up 8.1 basis points at 3.205 per cent, while the VIX index ended down 0.81 per cent at 27.02.
– Can be a long period
– It is clear that we are still in a bear market. To understand how long it will last, investors should look at other bear markets where the central bank is largely behind the downturn. For example, the downturns of the financial crisis in 2007-09, the time after the dotcom bubble burst, and the early 1990s, following the Fed’s aggressive rate hikes, lasted for two to three years. Until now, the decline in the stock market has only been around six months, says Trevor Gretham from Royal London Asset Management, to CNBC.
– The central banks have to reduce inflation, which means that more spare capacity is created in the economy, so this can be a fairly long period, Gretham believes.
– The days where there is the biggest upside are during the bear market, so be careful not to be sucked back in when it goes up. I think it is some time before the negative market development is over. Until then, you have to be tactical and diversified, Gretham concludes.