The shares are moving away from the edge of the first bear market in 2020

NEW YORK (AP) – Wall Street shook to the edge of a bear market Friday after another decline in shares briefly sent the S&P 500 with more than 20% below its peak set earlier this year.

The S&P 500, which is the basis of most workers’ 401 (k) accounts, fell 2.3 percent in the day before a fierce return in the last hour of trading led to a small profit of less than 0.1 %. He finished with 18.7% below his record set on January 3rd. The tumultuous trade ended the seventh consecutive losing week, its longest such series since 2001.

Raising interest rates, high inflationon war in Ukraineand a slowdown in the Chinese economy all are punishing the actions and raising fears of a possible recession in the United States. Complicating concerns is that the superhero who was rescued from Wall Street in recent downturns, the Federal Reserve, seems less likely to help as he struggles with the worst inflation in decades.

The S&P 500 ended the day up 0.57 points at 3901.36 points. The Dow Jones Industrial Average spun from an early loss of 617 points to a close of 8.77 higher, or less than 0.1%, at 31,261.90. The Nasdaq index lost a big loss to end 33.88 points lower, or 0.3%, at 11,354.62.

As the S&P 500 did not end the day with more than 20% below its record, the company responsible for the index said the bear market had not officially started. Of course, the 20% threshold is an arbitrary number.

“Whether or not the S&P 500 closes in the bear market doesn’t matter,” said Brian Jacobson, senior investment strategist at Allspring Global Investments. “A lot of pain has already been experienced.”

Many large technology stocks, considered one of the most vulnerable to rising interest rates, have already fallen much more than 20% this year. This includes a 37.2% drop for Tesla and a 69.1% drop for Netflix.

This is a sharp reversal of the powerful Wall Street movement, after coming out of its last bear market in early 2020, at the beginning of the pandemic. Through it, the S&P 500 has more than doubled, as a new generation of investors ostensibly greeted any hesitation with shouts of “Buy the fall!”

“I think a lot of investors are scratching their heads and wondering why the market is rising despite the pandemic,” Jacobsen said. “Now that we hope the pandemic is largely over, I think a lot of investors are kicking themselves in, they haven’t gotten out of the way, the economy is probably slowing down, and the Fed has made its policy.

With inflation at its highest level in four decades, the Fed has aggressively deviated from maintaining super low interest rates to support markets and the economy. Instead, it raises interest rates and makes other moves in hopes of slowing the economy enough to cut inflation. The worry is if it goes too far or too fast.

“Certainly market instability is caused by investors’ fears that the Fed will tighten policy too much and put the United States in recession,” said Michael Aron, chief investment strategist at State Street Global Advisors.

Bond yields fell as worries about the recession pushed investors into government securities and other things considered safer. Yields on 10-year government securities, which help set mortgage interest rates, fell 2.78% from 2.85% late Thursday.

Inflation has been painfully high for months. But market concerns have risen as Russia’s invasion of Ukraine led to further price hikes in grocery stores and gas stations as the region is a major source of energy and cereals. Meanwhile, the world’s second-largest economy has suffered a blow as Chinese officials close key cities in hopes of halting the COVID-19 case. All of this is accompanied by some disappointing figures for the US economy, although the labor market remains hot.

Adding pressure on stocks is a sign that corporate profits are slowing and may eventually be affected by inflation. This means that the pain has spread beyond technology and high-growth stocks to cover more than Wall Street.

Retail giants Purpose and Walmart both had warnings this week about inflation affecting finances. Discount retailer Ross Stores sank 22.5 percent on Friday after lowering its profit forecast and citing rising inflation.

“Recent profits from retail companies have finally signaled that consumers and businesses in the United States are negatively affected by inflation,” Arone said.

Although its source is different, the darkness of Wall Street reflects a sense of irritation across the country. Questionnaire The Associated Press’s Center for Public Research (NORC), released on Friday, found that only about 2 in 10 adults say the United States is moving in the right direction or the economy is good, both declining from about 3 to 10 months later. early.

Much of Wall Street’s bull market since early 2020 has been the result of buying from regular investors, many of whom began trading for the first time during the Pandika. Along with many cryptocurrencies, they have helped raise expensive people like Tesla shares. They even caused GameStop to suddenly rise to such a high level that it shuddered in professional Wall Street.

But these retailers, dubbed “retail investors” by Wall Street to differentiate themselves from large institutional investors, are withdrawing as stocks fall. Individual investors have gone from a net buyer to a net seller in the last six months, according to a recent Goldman Sachs report.