So far this year, the S&P 500 is down by 8.5%, while the Nasdaq and Russell 2000 are down even more with losses of 14.6% and 11.9%, respectively. Initially, stocks sold off due to a Fed and inflation which turned out to be more “sticky” rather than “transitory”.
Another bearish catalyst emerged with Russia’s invasion of Ukraine. Of course, this also fed into inflation fears given that Russia is a larger exporter of energy, metals, and agricultural commodities like wheat. Not to mention the elevated tail risk of a confrontation that escalates in terms of more countries getting involved and more lethal weapons being deployed. Thus, it’s understandable that investor sentiment has plummeted.
