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Monday’s $3 Trillion Stock Market Rout in Five Charts

* Nasdaq 100 set for worst January ever, falling nearly 16%
* S&P 500 set for correction, Russell 2000 bear market in sight

Nasdaq 100 Index’s worst start ever to new year, S&P 500 Index losing 10% and Russell 2000 approaching bear market — the global stock selloff is gathering pace and the market value losses on Monday alone are now ballooning to almost $3 trillion.

The Bloomberg World Large, Mid & Small Cap Price Return Index slumped 3% on Monday to below $100 trillion, and the total losses since the start of the year on the index now stands at $8 trillion.

The epicenter of the rout is still the U.S., where high valuation technology stocks have been hit hardest on concern that the Federal Reserve will raise interest rates faster than previously expected. The problem for these once high-fliers: Higher rates reduce the present value of future earnings.

For Morgan Stanley’s Michael Wilson the stocks retreat has further to go. “We have been monitoring PMIs and earnings revisions breadth for signs the slowdown is bottoming, but it has quite a bit further to go, in our view, and equity markets are not yet priced for it,” he wrote in a note.

Here’s the stock market selloff in five charts:

Nasdaq 100’s Messy Kickoff 

The tech-heavy benchmark has fallen 16% so far this year, and is on track for its worst January performance ever, surpassing even the 2008 losses, when the global financial crisis roiled equity markets worldwide. The latest selloff is coming ahead of the Fed’s two-day meeting starting Tuesday.

Russell 2000 Capitulates

Small cap-heavy Russell 2000 Index has been the worst hit in the U.S. as it hosts many of the frothy non-profitable companies that soared during two years of ultra-easy financial conditions. The index is down 20% from November highs, on track to enter bear market. More than one-fourth of the index’s components had hit 52-week lows on Friday – the highest reading since March 2020.

 S&P 500 Set For Correction

The S&P 500 Index is set to enter a correction after the benchmark fell for a fifth day, extending its drop to 10% from its last record close just three weeks ago.

Europe Not Spared Either

European stocks’ 2022 outperformance of their U.S. counterparts has also been fading fast. The benchmark Stoxx 600 Index slumped 3.8%, the worst rout since the peak of the pandemic selloff.

 


 Head of Trading Dimitar Kalapov

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