The S&P 500 moves closer to a bear market in the midst of high inflation and increasing rates by the Federal Reserve.
“While there’s still three weeks of trading left in May, 2022 has been the worst year-to-date return (-16.3 pct) so far relative to overall down years for the index save 1962,” Jessica Rabe, co-founder of DataTrek Research, said, as reported by Yahoo Finance.
Rabe expects the index will continue to underperform throughout the year.
Along with other indexes the S&P 500 plunged again after Wednesday trading adding five consecutive weeks of decline, the worst streak since 2011.
Losses accelerated last week as the Federal Reserve decided to raise the target interest rate by half percentage point, the biggest hike in 20 years. Monetary policymakers are still struggling to slow 40-year high inflation levels, opening doors for investors that are looking for safer investments.
According to DataTrek Research and based on historical trends, the S&P 500 will continue to underperform during months June-October when negative returns are recorded during the first five months of the year, however, in November and December losses are generally reigned in and returns flatten out.