On May 19, the S&P 500 opened the day near bear market territory; i.e., at a 20% drop from a recent high. On May 18, the S&P 500 experienced a 4% decline—the largest single-day decrease since June 2020. The last time the S&P 500 entered bear market territory was in March 2020, albeit short-lived, as the market turned around and headed into a two-year rally that peaked in early January 2022.
The current equity market losses (and some corporate bond losses) are primarily the result of several factors: 1) earnings reports from large American retailers, including Walmart and Target, show evidence that the continued high inflation rate may be affecting consumer demand; 2) the war in Ukraine has added to inflationary pressures, prompting the Federal Reserve (Fed) to increase interest rates and reduce bond holdings; and 3) recent COVID-19 shutdowns in China have led to a slowdown in the world’s second largest economy.
Author(s): Jennifer Johnson and Michele Wong
Publication Date: 19 May 2022
Publication Site: NAIC Capital Markets Special Report
Both economic and geopolitical factors have caused some volatility in the financial markets, including a recent significant decline in equity markets into “correction territory,” or a decrease greater than 10%. Equity markets have been declining over the last few weeks after reaching a record high at the beginning of 2022 when Standard & Poor’s 500 Index (S&P 500) reached almost 4,800. On Jan. 24, the S&P 500 was down as much as 2% intraday, but it rebounded to finish the day up 0.3%. Volatility continued into the following trading day, with the index declining 1.2% on Jan. 25.
Author(s): Jennifer Johnson, Michele Wong, and Jean-Baptiste Carelus
Stocks come and go, but every year a few tiny companies get promoted to the small-capitalization indexes. Some eventually make it all the way to the S&P 500.
What they don’t do is go in the space of 18 months from being a penny stock with a market value of $39 million to be worth more than a dozen S&P 500 companies, yet that is exactly what FuelCell Energy Inc. has done.
FuelCell isn’t alone. Fourteen members of the Russell Microcap index have risen so much that they ended Thursday larger than the smallest S&P stock. One, real-estate broker eXp World Holdings , has a market capitalization of nearly $10 billion, more than double the smallest S&P stock. When the index reset was announced last year, the largest stock in the index had a market capitalization of $840 million.