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The stock index that drives the bull is on the precipitation of a bear market – and that would make history




Forget the santa rally, the stock market is diverging in one of the worst years in recent memory, and now Nasdaq is on the verge of a bear market. It is a scenario that can unofficially start the end of the longest stock market, by some measures, in history.

From Wednesday's decline, the Nasdaq Composite Index

COMP, -0.04%

was 18.2% from its all-time height of 8,109.69 on 29 August. Wall Street's widely accepted definition of a bear market is a drop of at least 20% from a recent peak, leaving the technology and the internet-loaded inventory meter a stone's throw from the bearish territory.

According to Dow Jones Market Data, the last time Nasdaq entered a bear market on March 3, 2009, leaving it less than three weeks later.

In some estimates, the index may fall to 6.487.75 to enter a bear market, with other sub-indices already drawn there, including the Russell 2000 Index

RUT, -0.1[ads1]1%

of capital stock and the Dow Jones transport average

DJT, + 0.06%

less than 24 hours ago.

Read: The last key death crisis has swallowed up the stock market

On Wednesday, the already fragile shares took a remarkable leg lower after the Federal Reserve raised short-term interest rates for the fourth time this year (the ninth time since 2015) and provided forecasts for future increases that were less supportive of a market context than the investors had hoped.

Fed raised interest rates by quarter in percentage point to a range of 2.25% to 2.50% as expected and Chairman Jerome Powell signaled that interest rate hikes in 2019 were called back to two from three.

However, investors decided that monetary policy makers did not respond adequately to a market that has declined since the beginning of October, with all three main values ​​including the Dow Jones Industrial Average

DJIA, -0.48%

and the S & P 500 Index

SPX, -0.22%

already in the correction area, usually defined as a decline of at least 10% from a peak.

Read: Opinion: There is a darker message for investors in FAANG selloff

The bull market has flourished over a decade of economic and political disruption thanks to all-you-can-th liquidated host of the Federal Reserve and other major central banks.

Check out : Powell Party Pooper: Here are the Worst Results of the Fed Wrecks Market

And maybe no index has had the backdrop more than Nasdaq, with its high degree of high components including Facebook

FB, + 0.72%

Apple

AAPL, -0.11%

Amazon.com

AMZN, -0.09%

Netflix

NFLX, + 0.27%

and Google parent letter

GOOG, + 0.18%

GOOGL, + 0.26%

– a contingent of companies known as FAANGs, which, through their great market values ​​and stock prices, have contributed to to deliver as much as possible Significant contributions to winnings over the past 10 years.

Last year, Nasdaq led its peers, returning 28% for the full year, compared to a 25% gain for Dow and 19.4% for S & P 500. So far in 2018, S & P 500 is on its way to throw 6.2% in value, Dow is set for a 5.7% decline, while Nasdaq is looking at a drop of 3.9%.

A separate index, representing the largest companies in Nasdaq, Nasdaq-100

NDX, + 0.03%

is 17.2% from the end of August, from Wednesday's proximity, according to FactSet data.

Read: Text from the FOMC Declaration for December

The Fed has shifted to an apparently tighter attitude proposed by Powell and the market is not related to the transition well as it involves increased borrowing costs for institutions and individuals and more competition from interest-bearing assets that will provide richer returns with theoretically less risk.

On August 22, 2018, many market customers welcomed the stock market unofficially becoming the longest bull on record, avoiding an "official" 20% bear market. It moved over October 11, 1990 to March 24, 2000 beef market.

(For sure, there are some market participants who have problems with this item, including Stock Trader's Almanac Jeff Hirsch.)

In any event, this uninterrupted list of winnings, unofficial or not, is at risk.

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