Renewed concerns about inflation has the Fed triggered

This post was originally published on TKer.com.

It’s a bear market.

On Monday, the S&P 500 tumbled 3.9% to close at 3,749.63. That put the index down 21.8% from its January 3 all-time closing high of 4,796.56. This was the first time the S&P closed down by at least 20% from its high, confirming that we’ve been in an official bear market.

By the end of the week, the S&P had fallen to 3,674.84, down 23.4% from its high.

Historically, bear markets have come with more pain. According to Howard Silverblatt of S&P Dow Jones Indices, the average bear market has lasted 18.6 months and has seen the S&P 500 fall 38.3% before bottoming.1 The ones that came with economic recessions tended to be worse. Though, it’s not crazy to think this could be a bear market without a recession.

While the stock market is likely to generate healthy returns in the long run, there’s good reason for investors to manage expectations in the short run as the Federal Reserve gets increasingly aggressive with monetary policy.

‘The worst mistake we could make‘ 🦅

The stock market’s recent sharp declines came in the wake of the May consumer price index report — released on June 10 — which was much hotter than expected. The news intensified worries about inflation persisting and renewed calls for a more hawkish Federal Reserve.2

And the hits kept coming last week.

The New York Fed’s May Survey of Consumer Expectations released Monday confirmed that the inflation we’ve been experiencing today has…