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Today in the Market (5/20/2022)

Good Evening. On Friday, US markets concluded a turbulent session barely changed, but they still had hefty weekly losses. Concerns about tighter monetary policy, the economy’s resiliency, and corporate earnings in the face of inflation resurfaced, sending the S&P 500 on its longest weekly losing run since the dot-com bubble burst.

BEAR MAKET?

The S&P 500 is on the verge of settling 20% below its current record high, which would be the index’s first bear market since the COVID-19 epidemic began in 2020.

The Nasdaq Composite had already entered a bear market earlier this year, as traders moved away from growth equities amid expectations that the Federal Reserve would raise interest rates, putting downward pressure on the valuations of high-flying tech stocks. The Nasdaq Composite had dropped roughly 30% from its record high of Nov. 19, 2021, as of Friday’s close.

The Dow has entered a correction, or a decrease of at least 10% from a recent record high, but has not yet crossed the bear market threshold.

Let’s Look Back to Previous Bear Markets

According to LPL Financial Chief Market Strategist Ryan Detrick, there have been 12 true bear markets for the S&P 500 since WWII, and 17 “near bear markets,” in which the index lost more than 19%. The average reduction was 29.6%, and it lasted an average of 11.4 months.

What about right now… While the National Bureau of Economic Research (NBER) is responsible for officially declaring a recession, two consecutive quarters of negative GDP (gross domestic product) growth is commonly considered a recession. In the first three months of this year, the US economy shrank by 1.40% on an annualized basis.

COVID TO THIS?

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The first case of monkeypox in the United States was discovered in Massachusetts on Wednesday, and officials in New York City are looking into another probable case. At least 67 more suspected cases of the unusual virus have recently surfaced in nations such as the United Kingdom, Portugal, and Canada, perplexing experts who have yet to figure out how the virus managed to leap continents.

So what exactly is monkeypox? It’s a virus that spreads by bodily fluids and respiratory droplets. Fever, pains, enlarged lymph nodes, and painful blisters on the hands, feet, and face are all symptoms that can occur. The majority of the cases in this epidemic have been confirmed to be caused by a moderate strain with a 1% fatality rate.

Most people receive monkeypox directly from animals in West Africa or Central Africa (while it was first detected in monkeys, it’s usually spread by rodents), and it’s extremely rare to contract it from another person. However, the majority of the new cases have been detected in persons who have not recently gone to those areas, suggesting that they may have contracted the virus through community transmission.

Should we be worried? Right now, health experts say no. Because of the sores, monkeypox is fairly straightforward to see and monitor, and it’s similar enough to smallpox that immunizations for that illness would likely provide protection.

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