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Everything in the markets seemed on the verge of collapse this week.
NYSE
It’s the moment of truth for stocks—and investors might not enjoy what comes next.
For a moment this past week, the stock market felt like it was already there. On Thursday morning, the
S&P 500
index, down 19.6% from its closing high, was inches from entering a bear market. The
Nasdaq Composite,
home to tech stocks that had driven the bull market, was plunging. Even
Bitcoin
joined the pity party by breaking $29,000 and falling to near $25,000. Everything seemed on the verge of collapse.
But the market didn’t collapse. Instead, Federal Reserve Chairman Jerome Powell seemed to acknowledge that maybe the Fed wouldn’t be able to engineer a soft or soft-ish landing, as he had so confidently claimed after the May 4 policy meeting. Instead, he said that a recession was possible and largely out of the Fed’s control. For a Fed that was thought to be singularly focused on inflation—economic growth be damned—it was a small, if nuanced, shift, which traders seized on. From Thursday’s low through Friday’s close, the S&P 500 gained 4.3%, and even the
ARK Innovation
exchange-traded fund (ticker: ARKK), home to so many beaten-down tech stocks, rallied 24%.
Still, it was a terrible week for the market. The
Dow Jones Industrial Average
fell 2.1%, while the S&P 500 declined 2.4%, and the Nasdaq lost 2.8%; but the week ended with enough optimism to ask: Is this the bottom?
History offers little help. If a drop of more than 19% but not quite 20% sounds familiar,…
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