As S&P 500 confirms bear market, most of its components look worse

While the S&P 500 confirmed on Monday that it has been in a bear market since January, many of the benchmark's components are in far worse shape following months of fear-driven selling related to rising interest rates and worries about the economy.

The S&P 500's 3.9 per cent drop on Monday was fueled by worries that more aggressive interest rate hikes by the Federal Reserve could push the economy into a recession. The S&P 500 has now tumbled about 22 per cent since its Jan. 3 record high close, confirming it has been in a bear market since hitting that high.

Within the S&P 500, the picture is dire, with the median stock down 27 per cent from its 52-week high, as of Monday's close. Over two thirds of S&P 500 stocks were down more than 20 per cent from their own 52-week highs as of Monday's close.

Within the S&P 500 technology sector index, 93 per cent of stocks have fallen 20 per cent or more from their highs, including PayPal Holdings, which has now tumbled 76 per cent from its record high last July following a 7 per cent drop on Monday.

Previously highly valued growth stocks have been badly punished in recent months by investors worried about the group's vulnerability to rising interest rates.

Among stocks in the S&P 500 consumer discretionary index , more than 90 per cent are in bear markets, including Etsy , down 77 per cent from its record high, and Carnival Corp , down 67 per cent from its high. The cruise ship company's stock slumped more than 10 per cent on Monday.

Within the communication services sector index, Facebook-owner Meta Platforms has slumped 57 per cent from its 2021 high, and Walt Disney Co has fallen 49 per cent, including a drop of more than 3 per cent on Monday.

With investors dumping streaming services as competition deepens, Netflix has been the S&P 500's worst performer in 2022, down 72 per cent year to date.

Tesla, which last year soared to become one of Wall Street's most valuable companies, has now tumbled 39 per cent in 2022 after falling 7.1 per cent on Monday.

While investors are laser-focused on the central bank's next interest rate announcement on Wednesday and on worries about a potential recession, the stock market's recent tumble has cooled valuations that in 2020 reached their highest level since the dot-com era. The S&P 500 is now priced at about 17 times expected earnings, which is in line with its average forward PE over the past 10 years, according to Refinitiv data.