Majority of S&P 500 Companies are Now in a Bear Market

The past few weeks have not been too kind to the markets. In fact, after months of gains, the S&P 500 is now down 3% for the year thanks to several rounds of sell-offs. While that overall correction is modest, it’s a different story for many of the companies included in the bellwether index. As MarketWatch reports, the majority of S&P 500 stocks are now finding themselves in a bear market.

To comprehend what’s happening, it’s important to first understand how analysts define things like “bear market.” If a stock is down 10% from a recent high, it’s said to be experiencing a correction. Meanwhile a decline of 20% from a high is when a stock is declared to be in bear market territory.

Among the numerous major stocks that are off 20%+ from their 52-week highs are Facebook (-34%), Apple (-29%), Amazon (-22%), and Netflix (-37%). However the bear doesn’t just have FAANGs — it expands beyond tech as well. For example Bank of America, Wells Fargo, and Citigroup are all down between 26 and 32%, Home Depot has slid 20%, and GE is off a whopping 63%, just to name a few.

What’s also concerning is the number of S&P 500 companies falling into bear territory has grown significantly in just a few weeks. In a report sent to investors last month, Morgan Stanley equity strategist Michael Wilson declared that the U.S. was already in a bear market, adding “While 2018 is clearly not a year of recession, the market is speaking loudly that bad news is coming.” Part of his reasoning for this assertion was the fact that, at the time, 40% of stocks in the S&P 500 had sunk below that 20% threshold. With that stock count now climbing above 50%, there’s little question as to whether Wilson is feeling confident in his hypothesis.

As I noted earlier, the S&P 500 is currently down around 3% for the year. That said it’s off by more than 11% from its previous high seen in September. Thus the index still has a way to go before it nears official bear territory. Still, with the majority of stocks in the index now off 20% or more from previous highs, concern that the markets could be turning is increasing. Of course certain negative factors — such as the on-going trade war with China, political uncertainty, and the like — could still turn around in the new year and limit current loses to a mere correction. But, if things continue on their current trend, a full-blown bear market could soon be taking over.

Comments are closed.


Jonathan Dyer

I'm a small town guy living in Los Angeles looking to make solid financial decisions. I write for a number of finance websites, including HuffingtonPost and Business2Community. I founded in 2015 to focus on personal finance and the emerging FinTech markets.

Other Articles by Jonathan Dyer

Amex Launches Digital B2B Payments Platform Business Link

For consumers, these days, there's no shortage of peer-to-peer apps they can use to move money, with some popular examples including Cash App, Venmo, and Zelle. As for businesses, the list of options for sending money to vendors may be more limited. Now, a well-known credit card company and small business supporter is introducing a new platform for this purpose. This week, American Express announced the launch of Amex Business...

Carbon Credit API Cloverly Joins Visa's FinTech Partner Connect 

Last year, Visa introduced the FinTech Partner Connect program to the United States, with the goal of introducing institutions to vetted startups that could help them expand their product offerings. Now, the latest company to join the program is Cloverly. Founded in 2019, Cloverly is an API for carbon credits, allowing businesses and consumers to help fight climate change. As the company points out, with the Visa partnership, Visa clients...

Prosper Announces $75 Million Growth Capital Financing

A long-admired FinTech has added some new capital to its coffers and it continues to grow after more than 15 years in business. Recently, Prosper Marketplace announced that it had closed a $75 million debt financing round. This capital came from a fund managed by Neuberger Bergman and will be used to help Prosper meet the demand for its loans, credit card, investment products, and more. According to the company,...