Wall Street’s main indexes opened sharply lower on Monday amid a broader risk-off sentiment that also saw cryptocurrencies take a beating, while the benchmark S&P 500 fell into a bear market intraday as a higher-than-expected inflation print last week raised bets the Fed would tighten faster and further to quell price pressures.
Shortly after opening bell at 9:37 a.m. on June 13, the Dow Jones Industrial Average fell 563.56 points, or 1.80 percent, to 30,829.23; the Nasdaq Composite lost 284.93 points, or 2.51 percent, to 11,055.10; while the S&P 500 shed 87.03 points, or 2.23 percent, to 3,813.83.
Nick Reece, VP of macro research and investment strategy at Merk Investments, told The Epoch Times in a recent emailed statement that “the 20 percent decline threshold for defining a bear market is a somewhat arbitrary cutoff point” and, as such, its significance is more psychological than material. Still, he said he believes it’s likely that the current S&P 500 drawdown will exceed 20 percent peak to trough and so will “technically” confirm a bear market but will not match the depth of the 2007–2008 financial crisis.
“Though it’s no guarantee of the outcome, I continue to view the most recent all-time high (on Jan 3rd) as historically inconsistent with past major market tops and therefore unlikely to produce a major bear market like that of the early 2000s or 2007–2009 (on the S&P 500),” he said.
The U.S. 2-year Treasury yields climbed above 10-year borrowing costs on June 13 for the first time since a brief inversion in April, with the gap falling to as low as minus 0.02 percentage points, Tradeweb prices showed.
The closely-watched spread between the 2-year and 10-year Treasury yield is viewed by many analysts as one of the most reliable recession red flags.
The U.S. economy contracted by 1.5 percent in the first quarter, with a recession generally defined as two consecutive quarters of negative economic growth.
