Stocks fell slightly on Thursday, with the S&P 500 heading for its sixth consecutive weekly decline and gradually approaching bear market territory.
Trading was turbulent, and after a sharp rally, the S&P 500 finished just 0.1 percent lower, after a 1.7 percent drop on Wednesday.
The Nasdaq Composite was also volatile, but it didn’t change much at the end of the day.
Although the sell-off on Wall Street this year — which comes after the S&P 500 has risen 90% in the past three years — began with concerns about high inflation And interest rates, how can be combined hurt the economyIt has taken on a life of its own as investors see each new data point as a cause for concern.
The sale also hit cryptocurrencies like BitcoinAnd metal, etc Raw materials such as copper and oilThe losses reflect weak sentiment across financial markets as well as concerns about the global economy.
The drop left the S&P 500 on the edge of a bear market, which is Wall Street’s term for a drop of 20 percent or more from its recent peak. The label aims to highlight the bleak mood among investors. During Thursday, the index was down about 18 percent from its January 3 peak. The Nasdaq Composite is in bear market territory, down 29 percent from its November high.
This week’s drop came along with fresh updates on the pace of inflation in the US. The government said on Wednesday that the consumer price index rose 8.3 percent in the year to April, while a measure of prices paid to producers rose 11 percent. While both measures showed inflation had cooled off a bit from the previous month, they were still uncomfortably high.
For stock investors, the inflation data is directly feeding into opinions about how aggressively the Federal Reserve can raise interest rates: Higher borrowing costs will slow growth as well as dampen interest in risky investments.
Analysts say the bad mood among equity investors is unlikely to change until they deal with the time the Fed raised its benchmark rate by half a percentage point this month and is expected to do so again when it meets in June and July, and will slow the rate increase. That will not be clear until it is confirmed that inflation has peaked.
Bill Adams, chief economist at Comerica Bank, wrote in a note to clients Thursday.