As S&P 500 confirms bear market, most of its components look worse

14 Jun 2022

Reuters

As SP 500 confirms bear market most of its components look worse

While the S&P 500 confirmed on Monday that it has been in a bear market since January, many of the benchmark's components are in far worse shape following months of fear-driven selling related to rising interest rates and worries about the economy.

A trader works on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., June 13, 2022. REUTERS/Brendan McDermid

June 14 (Reuters) - While the S&P 500 confirmed on Monday that it has been in a bear market since January, many of the benchmark's components are in far worse shape following months of fear-driven selling related to rising interest rates and worries about the economy.

The S&P 500's (.SPX) 3.9% drop on Monday was fueled by worries that more aggressive interest rate hikes by the Federal Reserve could push the economy into a recession. The S&P 500 has now tumbled about 22% since its Jan. 3 record high close, confirming it has been in a bear market since hitting that high. read more

Within the S&P 500, the picture is dire, with the median stock down 27% from its 52-week high, as of Monday's close. Over two thirds of S&P 500 stocks were down more than 20% from their own 52-week highs as of Monday's close.

Within the S&P 500 technology sector index (.SPLRCT), 93% of stocks have fallen 20% or more from their highs, including PayPal Holdings (PYPL.O), which has now tumbled 76% from its record high last July following a 7% drop on Monday.

Previously highly valued growth stocks have been badly punished in recent months by investors worried about the group's vulnerability to rising interest rates.

Among stocks in the S&P 500 consumer discretionary index , down 67% from its high. The cruise ship company's stock slumped more than 10% on Monday.

Within the communication services sector index (.SPLRCL), Facebook-owner Meta Platforms (META.O) has slumped 57% from its 2021 high, and Walt Disney Co (DIS.N) has fallen 49%, including a drop of more than 3% on Monday.

With investors dumping streaming services as competition deepens, Netflix (NFLX.O) has been the S&P 500's worst performer in 2022, down 72% year to date.

Tesla (TSLA.O), which last year soared to become one of Wall Street's most valuable companies, has now tumbled 39% in 2022 after falling 7.1% on Monday.

While investors are laser-focused on the central bank's next interest rate announcement on Wednesday and on worries about a potential recession, the stock market's recent tumble has cooled valuations that in 2020 reached their highest level since the dot-com era. The S&P 500 is now priced at about 17 times expected earnings, which is in line with its average forward PE over the past 10 years, according to Refinitiv data.

Reporting by Noel Randewich; editing by Megan Davies and Richard Pullin

Our Standards: The Thomson Reuters Trust Principles.