A cruel April has just sent the S&P 500 into its second stock market correction in 2022

A grim end to a cruel April last Friday saw the S&P 500 post its second correction – a 10% drop from a recent high – so far this year.

The big benchmark SPX,
ended a hectic week with a drop of 3.6% on Friday and closed at 4,131.93, its lowest finish since May 19, 2021. That leaves it a drop of 10.8% from its close of 4,631.60 set it March 29, which was the day it left a correction, it was introduced in late February.

A correction is generally defined as a withdrawal of at least 10% – but not more than 20% – from a recent peak. A correction is left after an increase of at least 10% from a correction low.

The S&P 500 fell in correction only 22 trading days after leaving the previous, its fastest re-entry since November 2008, during the turmoil during the financial crisis of 2007-2009, when the index fell back in correction only 7 trading days after it left one. It later fell into a bear market.

The S&P 500 previously had a correction on February 22, closing at 4,304.76, down 10.25% from its record closing in early January. Shares extended a decline in early March as investors reacted to Russia’s invasion of Ukraine on February 24, which caused oil prices to rise to almost 14-year highs and caused geopolitical anxiety.

A closed low of 4,170.70 on March 8 marked the bottom of this move.

Shares fell again in volatile April trading, marked by large daily and intraday fluctuations. Dow Jones Industrial Average DJIA,
fell 4.9% in April, while the S&P 500 fell 8.8% and the Nasdaq Composite COMP,
fell 13.3 per cent. These were the largest monthly percentage declines since March 2020 for the Dow and S&P, and the largest for the Nasdaq since October 2008.

Read: A tough 4 months for stocks: The S&P 500 books the worst start to a year since 1939. Here’s what professionals say you should do now.

It was the worst performance in April for the Dow and S&P 500 since 1970, and the biggest drop in April for the Nasdaq since 2000.

Shares fell as investors digested mixed results from former high-flying technology companies. They also adjusted expectations around the Federal Reserve and the prospect of a series of rising interest rates and an aggressive liquidation of the central bank’s balance sheet as it tries to curb inflation, which is at its hottest in more than 40 years.

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