S&P 500 tumbles in worst-ever start through 16 days

The stock market has never been down this much 16 trading days into a year.

The S&P 500 has dropped 11% — heading toward what would count as a correction — so far this year. That’s the most on record at this juncture, according to Bloomberg data that goes back over nine decades, though drawdowns have been faster in prior years before quick rebounds, most notably in 2009.

The downturn comes as traders brace for the Federal Reserve to tighten monetary policy and a surge in US Treasury yields weighs on the outlook for stocks. A host of technical signals also suggest that more volatility may be coming up ahead.

“The Fed pulled the punchbowl, liquidity has evaporated, and the S&P and NDX broke below their 200dma for the first time since the Covid outbreak,” said Rich Ross, technical strategist at Evercore ISI.

A bear market down to the 3 800 level is likely for the S&P 500, Ross said, given “the dramatic erosion of the technical backdrop, in conjunction with the highest inflation, tightest policy, and most uncertain political and geopolitical condition in years” — not to mention its historic rally since 2020.

The benchmark index fell as much as 4% to 4 223 on Monday, its lowest since June.