Stock markets have had a very good start to the year, with the S&P500 up nearly 10% and the Nasdaq up nearly 20% after 2022, their worst year since 2008. However, U.S. stock indices ended last week with big losses after a string of strong labor market data and worse-than-expected inflation. The S&P 500 fell 2.7% to close at 3970, its worst week since December 9. And the Nasdaq closed 3.3% lower, falling to 11,394 points.
A recent Bank of America
survey found that two-thirds of investment fund managers believe a bear market rally is off to a quick start in 2023. After prolonged declines during a bear market, recovery phases occur, leading to a sharp rebound in stock prices. These short-term rebounds can last days, weeks, and sometimes months before a deeper correction begins.