It's time to 'play defense' with stocks experiencing a classic bear-market rally, Wells Fargo warns
Stocks won't exit the bear market until the Federal Reserve's last interest rate hike, according to Wells Fargo.
Investors need to be cautious despite major indices' recent gains, CIO Darrell Cronk told Bloomberg TV.
"This very much looks like a bear market rally… you've got to play defense," Cronk said.
It'什么是熊市（Bear Market）？ s time for investors to get defensive and consider jumping out of stocks, which look caught in the middle of a bear-market rally, according to a Wells Fargo investment chief.
Darrell Cronk told Bloomberg TV he's skeptical about how well equities will perform over the rest of 2022, even though the S&P 500 has climbed more than 15% since hitting a low for the year in June.
"This is the question: Is this a bear market rally or the start of a new bull?" Cronk, CIO for Wells Fargo Wealth and Investment Management, said on Friday. "This to us very much looks like a bear market rally."
"People forget that as bear markets get older, the bear market rallies get larger. This is the largest one we've seen, we've had six S&P 500 rallies during this bear of 7% or greater."
He believes the S&P 500's recent rally isn't sustainable, given the US benchmark has failed since April to break above its 200-day moving average. If stocks rise or fall through this key resistance level, it's seen as a change in long-term direction.
"The fact that we've failed off the 200-day to us still says that you've got to play defense," Cronk 什么是熊市（Bear Market）？ said — suggesting they pivot away from stocks, and into less risky and volatile markets such as bonds 什么是熊市（Bear Market）？ or cash.
The Wells Fargo CIO said bear markets don't end three things happen: housing market forward 什么是熊市（Bear Market）？ indicators hit a bottom, earnings estimates fall significantly or trough, and the Federal Reserve is on the verge of stopping its interest rate hikes.
"You've got to get closer to the Fed being at or within sight of their last interest rate hike," he said. "We think we're still probably at least six months away from that."
"So, bear market rally — play defense here from a risk standpoint," Cronk said.
Markets have gained thanks to some investors' expectations that the Fed will pivot to 什么是熊市（Bear Market）？ start cutting interest rates soon. But Wall Street strategists have warned that the US central bank's current hiking cycle won't end until 2023.
Analysts at Goldman Sachs, Bank of America, and HSBC all said last week that the Fed will likely continue to hike until nominal rates are at 4%, around 150 basis points above their current level.
Bloomberg
We've detected unusual activity from your computer network
To continue, please click the box below to let us know you're not a robot.
Why did this happen?
Please make sure your browser supports JavaScript and cookies and that you are not blocking them from loading. For more information you can review our Terms of Service and Cookie Policy.
Need Help?
For inquiries related to this message please contact our support team and provide the reference ID below.
The S&P 500 is now in an official bear market, according to S&P Dow Jones Indices
It's official, according to the folks who decide which markets are bulls and which are bears, not to mention which stocks go into the 什么是熊市（Bear Market）？ Dow Jones Industrial Average and the S&P 500.
U.S. stocks on Monday entered a bear market because 什么是熊市（Bear Market）？ 什么是熊市（Bear Market）？ the S&P 500 closed more than 21% below its all-time record close reached as recently as last January, S&P Global Dow Jones Indices senior index analyst Howard Silverblatt wrote.
Stocks had been flirting with a bear market for the past several weeks on an intraday basis, but had never actually closed below 3837, the level S&P Global needed to see in order to officially declare one.
S&P Global says a 20% 什么是熊市（Bear Market）？ decline in the S&P 500 on a closing basis from its previous peak is all it takes to 什么是熊市（Bear Market）？ 什么是熊市（Bear Market）？ define a bear market. Which means that this bear market is already more than five months old, since the S&P 500 all-time high came on January 3.
Prior bear markets for the S&P 500
| Start date | 什么是熊市（Bear Market）？ 什么是熊市（Bear Market）？End date | Start price | End price | Months | S&P 500 % change | Prior Bull mkt % gain |
|---|---|---|---|---|---|---|
| 9/7/1929 | 6/1/1932 | 31.92 | 4.40 | 32.8 | -86.2 | |
| 3/6/1937 | 4/29/1942 | 18.68 | 7.47 | 61.8 | -60 | 325 |
| 5/29/1946 | 6/14/1949 | 19.25 | 13.55 | 36.5 | -29.6 | 158 |
| 8/2/1956 | 10/22/1957 | 49.64 | 38.98 | 14.7 | -21.5 | 266 |
| 12/12/1961 | 6/27/1962 | 72.64 | 52.32 | 6.什么是熊市（Bear Market）？ 5 | -28 | 86 |
| 2/9/1966 | 10/7/1966 | 94.06 | 73.20 | 7.9 | -22.2 | 80 |
| 11/29/1968 | 5/26/1970 | 108.37 | 69.29 | 17.8 | -36.1 | 48 |
| 1/11/1973 | 10/3/1974 | 120.24 | 62.28 | 20.7 | -48.2 | 74 |
| 11/28/1980 | 8/12/1982 | 140.52 | 102.42 | 20.4 | -27.1 | 126 |
| 8/25/1987 | 12/4/1987 | 336.77 | 223.什么是熊市（Bear Market）？ 92 | 3.3 | -33.5 | 229 |
| 7/16/1990 | 10/11/1990 | 368.95 | 295.46 | 2.9 | -19.9 | 65 |
| 3/24/2000 | 10/9/2002 | 1527.46 | 776.76 | 30.5 | -49.1 | 417 |
| 10/9/2007 | 3/9/2009 | 1565.15 | 676.53 | 17 | -56.8 | 101 |
| 2/19/2020 | 3/23/2020 | 3386.15 | 2237.40 | 1.1 | -33.9 | 401 |
| 1/3/2022 | 6/13/2022 | 4796.56 | 3749.63 | 5.3 | -21.8 | 114 |
| AVERAGE | 18.6 | -38.2 | 177.8 |
Since the modern S&P 500 index began in the late 1920s, the average bear market has translated into a 38% price decline lasting an average of almost 19 months.
But that's only the average. The longest bear market lasted 62 months, between 1937 and 1946, while the worst decline came as the Great Depression got underway and stocks plunged 86%.
The causes of 什么是熊市（Bear Market）？ every bear market are different, of course. This one is defined by the Fed tightening interest rates in reply to galloping inflation that's running at the fastest clip in 40 years, and the first European land war since World War 2.
Loading chart.
The last bear market in early 2020 was caused by the onset of Covid-19, a global pandemic, and the economic contraction that followed. The Global Financial Crisis created the 2007-2009 bear market as the housing market imploded. The bursting of the Tech Bubble led directly 什么是熊市（Bear Market）？ to the 2000-2002 bear market.
So, how does S&P Global define the end of a bear market? When the index reaches its low and later rises by 20%. Unfortunately for investors, that can only be known 什么是熊市（Bear Market）？ in hindsight.
Stocks have officially entered bear market territory—here's what that means and what you should do
The 什么是熊市（Bear Market）？ months-long slide for the S&P 500 index has officially thrown stocks far enough off of their all-time highs to be considered a bear market.
Since the beginning of 2022, the S&P 500 index is down nearly 21% as of Monday afternoon, with companies like Amazon and Google parent Alphabet leading the way with 什么是熊市（Bear Market）？ 什么是熊市（Bear Market）？ their 39% and 27% respective drops. Elon Musk's Tesla has also lost 45% of its market value since January — shaving more than $500 billion off of its market cap.
The problem has been exacerbated 什么是熊市（Bear Market）？ by inflation and global uncertainty, with experts predicting that a recession could be around the corner.
Here's 什么是熊市（Bear Market）？ what you need to know about bear markets, and what you should do when you find yourself in one.
What exactly is a bear market?
Put simply, bear market is the term used to describe when the equity markets are down 20% or more from their most recent all-time high. In this case, the S&P 500 index closed Monday at 3,749.91, with its previous high being 4,818.62.
Since World War II, there have been 14 bear markets that have pulled the S&P down an average 什么是熊市（Bear Market）？ of 30%, according to CNBC. Each bear market is unique, says Laura Veldkamp, a finance and economics 什么是熊市（Bear Market）？ professor at Columbia University, and the current one has a slew of causes.
Wherever there's a lot 什么是熊市（Bear Market）？ of guessing and a lot of uncertainty, that means people's beliefs can move around a lot. And 什么是熊市（Bear Market）？ with those beliefs go stock prices.
Two of those causes are interest rates being raised to fight runaway inflation and pandemic-related uncertainty fueling the stock slide as investors try to figure out the long-term repercussions that Covid-19 will have on the global economy, Veldkamp says.
"The truth is, nobody knows what will be the long-term consequences of having [shut down parts of the economy for long periods of time], because 什么是熊市（Bear Market）？ we don't have any experience having done it before," she tells CNBC Make It. "Wherever there's a lot of guessing and a lot of uncertainty, that means people's beliefs can move around a lot. And with those beliefs go stock prices."
What should investors do during a bear market?
For many investors, seeing their investment portfolios turn red can be alarming and make them want to pull their money out to avoid further losses. But this is the wrong strategy, Veldkamp says.
"Do not sell right now unless you absolutely need that money," she says. "If you're a young person who's putting some stocks in a 401(k) for retirement, don't worry about this. Just keep doing what you're doing."
Indeed, bear markets "are historically fantastic opportunities to build wealth for longer-term investors," says Matt Stucky, senior portfolio manager at Northwestern Mutual Wealth Management.
Stock picks and investing trends from CNBC Pro:
"An investor that starts off methodically putting money into a 401(k) is going to have a bigger balance 20 or 30 years from now if earlier on during their investing career they were able to take advantage of bear markets versus having to buy at all-time highs all the time," he says.
Still, Stucky recommends that investors don't rush to invest all their money. They should also focus on 什么是熊市（Bear Market）？ growing their savings. The important thing is for investors to "make sure that you can handle these swings" when buying stocks, because there will be more volatility to come.
"Just from a sleeping-at-night situation, you don't want your portfolio to create anxiety for you that affects your mental health," he says.什么是熊市（Bear Market）？
How long do bear markets last?
The bright side is that the market has bounced back from every 什么是熊市（Bear Market）？ single bear market, Veldkamp says.
"Have faith that it's going to come back in due course well before you retire," she says. "Usually, it takes a couple of years to recover some losses like this."
The average bear market lasts 359 days, and Stucky adds that it can take a full 什么是熊市（Bear Market）？ 什么是熊市（Bear Market）？ 38 months to go from the bottom of a bear market to a new all-time high. He says 什么是熊市（Bear Market）？ 什么是熊市（Bear Market）？ that getting through an extended stretch like that can be stressful, and for some investors, it might be helpful to get out of the habit of checking their balance frequently.
"There's no reason you need to introduce more anxiety into your life by looking at your balance multiple times a day or every day or every other day," Stucky says. "You could check it once a month and be fine."