On Friday, the S&P 500 broke a 7-week losing streak, the index’s longest since 2001.
Concerns about a slowing economy and tighter monetary policy from the Federal Reserve have been at the center of this decline. Last week’s rebound likely has some investors wondering if the worst is over for stocks, and asking if we’re set to see a comeback similar to what followed the pandemic-induced bear market of 2020.
One strategist, however, doesn’t see the ingredients for this kind of rebound in the current environment.
“There’s no V-shaped bottom here,” Michael Antonelli, managing director and market strategist at Baird told Yahoo Finance Live on Friday.
“V-shaped bottoms are completely comprised of the Fed getting really super friendly, putting a tailwind [behind the market], [or] some sort of fiscal impulse,” Antonelli said. “Neither of those are happening.”
Last week, the minutes from the Fed’s latest policy meeting suggested that after raising its benchmark interest rate by 0.50% in early May, the central bank is set to do the same in both June and July.
And if history is any guide, expect the current near-bear market to last roughly a year, Antonelli says.
“If you’re looking peak-to-trough, the average bear market is about 338 days, so a little bit less than a year,” Antonelli told Yahoo Finance. “If you’re talking peak, to trough, [and] back to peak, that’s about 600 days, so a little over a year and a half. It is going to take us some time to get through this.”
Year-to-date, the S&P 500 (^GSPC) is down nearly 13%, the Nasdaq (^IXIC) is down more than 22%, and the Dow (^DJI) is off more than 8%.
Over the long-term, however, history suggests U.S. stocks tend to remain resilient and bounce back after sharp declines. Following all 11 of the worst years in history, Antonelli notes, the index was higher five years later.
