Summary
- At -18.1% and -17.8%, 2022 marked the first time the S&P 500 and the 10-Year Treasury Bond respectively both delivered negative annual returns below -10% in the same year.
- All bear markets have significant rallies in the midst of the bear market. A high-teens percentage rally does not mean the bear market is over.
- In November 2022, the Purchasing Manager Index dropped below 50, indicating a shrinking manufacturing economy, and it fell further in December.
- Consensus expectations for S&P 500 full-year 2022 operating earnings are down to $198.73. Yet, 2023 estimates of $223.63 imply a rapid and significant rebound, not impossible but much higher than the historical track record would suggest is probable.
- October 2022 may prove to be the bottom of this bear market, but with the negative rate-of-change dynamics in key economic and corporate profit data, there is insufficient evidence to warrant an aggressive investment posture.
For further details see:
Caution Warranted Despite Bear Market Rally