Finance:2022 stock market decline
The 2022 stock market decline is the bear market that is occurring amidst the COVID-19 recession and 2021–22 inflation surge. The S&P 500 index peaked at 4,796 on its January 3rd close and dropped 23.55% to 3,666 by June 16th, 2022. As part of the global decline in most risk assets, the price of Bitcoin collapsed 59% during the same time period, and it declined 72% from its November 8th all-time high. The DJIA fell 18.78% since its January 4th high. Nasdaq Composite fell 33.70% from its November 19th high. [1][2]
Background
Financial instability in 2022 was a holdover from the COVID-19 pandemic as investors attempted to determine the long-term effects of the pandemic on the global economy.[3] Global indices began to decline after January 2022, but the Russian invasion of Ukraine escalated the decline as fears of energy disruption became apparent.[4] Massive Quantitative easing, big stimulus pacakages, and the Russian invasion of Ukraine led to a fire in Inflation. Due to this the Federal Reserve which controls Monetary policy had to raise rates at rapid speed which further led to a decline in the Stock Market. Stocks favor low Interest rate enviroments because of future growth and when Interest rate are low companies can increase spending which leads to increase in stock prices. [5] Also as United States Gross domestic product shrank in first quarter of 2022, fears of Recession contributed to the decline in Equity prices.[6]
By region
China
Concerns over the economic effects of China's Zero-COVID strategy and its regulatory crackdown on companies like Ant Group have led to a decline in Chinese stock prices. In June 2022, the Alibaba Group's (NYSE: BABA) share price declined from a peak of over US$300 in mid-2020 to below US$100.[7]
Emerging Markets
Due to the global selling of stocks worldwide, Emerging Markets were hit by worst sell-of in decades. The JPMorgan EMBI Global DIversified delivered returns of minus 15 percent just in 2022. Emerging Market ETF's such as VWO, IEMG, and EEM are all down more than 15 percent since the start of 2022. [8]
By industry
Cryptocurrency
The valuations of cryptocurrencies like Bitcoin and Ethereum plunged in June 2022 as investors moved their money out of risky assets.[9]
References
- ↑ Schnipper, Scott (2022-06-13). "The S&P 500 is now in an official bear market, according to S&P Dow Jones Indices" (in en). https://www.cnbc.com/2022/06/13/sp-500-is-in-official-bear-market-according-to-sp-dow-jones-indices.html.
- ↑ Gura, David (2022-06-13). "Stocks sink, sending the S&P 500 to a bear market" (in en). NPR. https://www.npr.org/2022/06/13/1104552530/stocks-sink-s-p-500-bear-market.
- ↑ Vega, Nicolas (2022-06-14). "Stocks have officially entered bear market territory—here's what that means and what you should do" (in en). https://www.cnbc.com/2022/06/14/what-experts-say-to-do-during-a-bear-market.html.
- ↑ Management, Phillip Toews, Toews Asset. "Opinion: Ukraine War Likely Has Triggered Lasting Bear Market" (in en-US). https://www.barrons.com/advisor/articles/opinion-ukraine-war-bear-stock-market-51647285190.
- ↑ Sulivan, Bob (2022-06-23). "How Does The Stock Market Perform When Interest Rate Rise?" (in en). https://www.forbes.com/advisor/investing/how-interest-rates-affect-stock-market/.
- ↑ Simonetti, Isabella (2022-06-30). "After Worst Start in 50 Years, Some See More Pain Ahead for Stock Market" (in en). https://www.nytimes.com/2022/06/30/business/stock-market-worst-start-50-years.html.
- ↑ Calhoun, George. "Alibaba Update: It’s Down 75%. Is It Still A Value Play?" (in en). https://www.forbes.com/sites/georgecalhoun/2022/06/01/alibaba-update-its-down-75-is-it-still-a-value-play/.
- ↑ Jonathan, Wheatley. "Emerging Markets hit by worst sell-off in decades" (in en). https://www.ft.com/content/1e5dbb60-5c9c-47b7-8f81-7022c9f26349/.
- ↑ Vigna, Corrie Driebusch and Paul (2022-06-18). "The Crypto Party Is Over" (in en-US). Wall Street Journal. ISSN 0099-9660. https://www.wsj.com/articles/the-crypto-party-is-over-11655524807.
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