From America to Asia, the stock market has entered a “bear” period due to the rise in interest rates by the Federal Reserve, the Ukrainian-Russian conflict, and the weakening of the Chinese economy, according to The Dallas Morning News.
The reason they call it a Bear Market is that bears hibernate in the winter just like stocks are hibernating right now. Such as when Stock brokers find a profitable stock market and call it a “bull market” because the bull charges.
The stock market is going through a downfall of 20%. The S&P 500 (Standard & Poor’s 500 Index) which is a market-capitalization-weighted index of 500 leading publicly traded companies in the U.S fell 22% from last month. This index is a reference to the safety of the stock market for the large capital that moves through these companies.
Although there are various factors behind the bear market, one of the main reasons business speculators are pointing out is that the Federal Reserve will increase the interest rate to three-quarters of a percentage point, to slow down the overall economy.
During the pandemic, the Federal Reserve lowered the interest rate to almost 0 to point out the benefits of the stock market and get the economy moving. This measure made the stock market very attractive to investors and common people with a phone and a few extra dollars.
The problem is that inflation is reaching bigger levels and instead of peaking, it continues to raise prices, especially of gasoline. The Federal Reserve decided to slow down the economy by elevating the interest rates, although many experts have said this measure could easily provoke recession if used aggressively.
Government treasury bond yields are also suffering the consequences of speculation. The 10-year-yield and 2-year-yield, which are seen as one of the most safest and used investments, are on the rise. The 10-year yield reached 3.27% from 3.14%. The 2-year yield shot to 3.20% from 2.06%, according to Daily Process.
Other markets affected were cryptocurrency. Bitcoin tumbled more than 14% on Monday. The price fell below $23,000 on Monday, last year the price for Bitcoin neared $68,00, according to Daily Process.
Although the stock market is entering recession and pulling back your money could seem a good idea, experts told The Dallas Morning News that bear markets are usual, the last one happened during the first months of the quarantine.
Since the Second World War, bear markets have taken approximately one year to cease. if it’s in your possibilities, experts recommend letting the money go up and down, arguing this option is preferable to having no earnings.
