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4 Risks of a Bear Market for Stocks Today

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The S&P 500 and Nasdaq 100 indexes are coming off their best weeks since November 2020 even after a rough start to the year. But the question now for investors is whether the gains will stick.

It’s a unique moment for the U.S. stock market, which is staring down a distinct set of circumstances — from geopolitical risks to rising interest rates — that when combined have historically led to a bear markets.

First, the Federal Reserve is starting to raise interest rates, with the first quarter-point hike coming last Wednesday and many more on the way.

Then there’s Russia’s war with Ukraine, which is creating a humanitarian crisis in Europe and destabilizing financial markets around the world.

Meanwhile, oil prices are soaring past $100 a barrel and threatening to further stoke inflation, which is already at a 40-year high. And parts of the Treasury yield curves are inverting.

Here’s a look at what history says about the U.S. stock market when these factors collide.

(Image: Adobe Stock)

 

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