The S&P 500 is now (nearly) 20% below its peak

The year 2022 started out with a positive signal: on January 4, the S&P 500 hit an all-time high of 4818. A 20% decline would be 3855.

But the inflationary winds had already started to blow and now global central banks have pivoted into an increasingly hawkish stance and hoped-for signs of an H2 fade in price pressures are dwindling as Shanghai remains locked down.

In March there was a strong bounce in stocks but it’s been a nearly-straight line lower since the start of April and the S&P 500 is now down 20%.

Despite the pain, the S&P 500 is only back to March 2021 levels and is still up 14% from the pre-covid high and 76% from the covid low.

The risk from here is that we’re no longer in as good of an environment as pre-covid. A rate rise might not be a one-off to sort out supply chains, we could be in a period of persistently high  inflation  with higher borrowing costs.

Moreover, there’s a true tech bust ongoing. The 2000 tech bust took two years to unwind and bottomed nearly 50% lower.