Stock futures fell Thursday night as investors prepared for the S&P 500 to potentially slip into the territory of the official bear market.
Futures linked to the Dow Jones Industrial Average lost 68 points, or 0.2%. S&P 500 futures fell 0.2% and Nasdaq-100 futures fell 0.3%.
On Wednesday, the S&P 500 and Dow returned their lowest intraday, but still fell by 0.1% and 0.3% respectively. S&P closed down more than 1[ads1]8% from the all-time high, and will be in an official bear market if the loss increases to 20%. The Dow has declined in six straight trading sessions.
The Nasdaq squeaked out a gain of less than 0.1% on Wednesday, but the technology-heavy index is already in a bear market, down more than 29% from the all-time high.
The stock market has been falling for several months, starting with high-growth unprofitable technology stocks late last year and even spreading to companies with healthy cash flow stocks in recent weeks. On Thursday, Apple fell into a separate bear market, and became the last of the Big Tech names to give in to sales.
The decline has wiped out much of the rapid gains in equities from their pandemic lows in March 2020.
“Large deviations from long-term price trends have been used for bubble identification. We find that US stocks have been in a bubble based on this calculation, and are now going out of it,” Citi strategist Dirk Willer said in a note to clients on Thursday. .
One reason equities have struggled in recent months is high inflation, and the Federal Reserve’s attempts to limit prices by raising interest rates. Fed leader Jerome Powell told NPR on Thursday that he could not guarantee a “soft landing” that brought down inflation without causing a recession.
Although equities enjoyed a two-week rise after the Fed’s first rate hike in March, those gains were quickly erased by a brutal April, and sales have continued in May. There are some signs, such as investor sentiment surveys and some stabilization in the Treasury market this week, that the market may be close, but many investors and strategists say that the market may need to take another significant step down.
“You get this market that is really asking for a bottom, for a relief rally. But at the end of the day, it really has not been a capitulation day,” said Andrew Smith, investment strategist at Delos Capital Advisors.
Developments in cryptocurrencies have also irritated Wall Street this week, with bitcoin falling well below $ 30,000 and stack coins struggling to hold on.
On the economic data front, Friday has a reading of import prices in April and an early look at consumer confidence in May.