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US S&P 500 ‘bear market’: How did it happen, what will it mean? – Al Jazeera English

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As investors grow increasingly worried about inflation and higher interest rates, Wall Street has fallen into a bear market.

The US Federal Reserve bank has indicated that it will push up interest rates as it struggles to curb the highest rates of inflation the country has seen in decades. The uncertainty unleashed by Russia’s invasion of Ukraine and the slowdown of the Chinese economy has also resulted in declining stock prices in sectors from tech to car manufacturers. Increasingly volatile changes in the value of stocks have become more common.

The US last entered into bear market territory about two years ago. Aggressive action by the Federal Reserve throughout the pandemic kept stocks moving in an upward direction, but substantial losses in high-risk assets such as cryptocurrencies have damaged investor confidence. Near the end of 2021, Bitcoin was valued at nearly $68,000. As of Monday, that value had dropped to less than $23,000.

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Here is more information about “bear markets”.
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Why the term ‘bear market’?

A bear market is used to describe when a stock index such as the S&P 500 or the Dow Jones Industrial Average drop by 20 percent over a sustained period after a recent high.

Sam Stovall, a chief investment strategist at CFRA, told the Associated Press that the term “bear market” is used because bears hibernate, representing a market that has slowed down or ceased moving forward. The term “bull market” is used to describe the opposite: a market charging forward.

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In the US, the S&P 500 is seen as a vital indicator of Wall Street’s confidence, or lack thereof, in the market. That index fell nearly 4 percent on Monday, and is more than 20 percent below a record high that it reached earlier this year.

The Dow Jones sank by almost 3 percent on Monday, and the Nasdaq, which is composed largely of tech-related stocks, fell by nearly 5 percent.

The most recent bear market for the S&P 500 was also the shortest: between February 19, 2020, and March 23, 2020, the index dropped by nearly 35 percent.

Why are investors worried?

The primary cause of concern among investors is interest rates, which are ticking steadily upwards to combat high levels of inflation that are hammering the economy. If low rates tend to cause stocks to rise, higher rates can have the opposite effect.

The Federal Reserve, which was focused on propping up markets during the pandemic, has now zeroed in on combatting rising inflation. Record-low interest rates had made it easier for investors to shift money into less stable assets such as stocks and cryptocurrency, hoping for higher returns due to the riskier nature of the investment.

Those near-zero interest rates are now coming to an end. Last month, the Fed indicated that new rate increases are likely to occur in the next several months, and could be as much as double the normal increases. Consumer prices have risen nearly 9 percent from May of 2021 and are now about the highest levels in 40 years.

By making the cost of borrowing money more expensive, the rising rates will slow the economy. This can help curb inflation, but also comes with the risk of triggering a recession if rates go up too much or too quickly.

Rising commodities prices have also been pushed upward by Russia’s invasion of Ukraine, contributing to rising inflation. Concerns about China’s economy, the second-largest in the world, have also been the source of a worsening outlook from investors.

Avoiding a recession?

While the Fed will attempt to balance containing inflation with the need to avoid sparking an economic downturn, rising rates will likely push stocks down.

If it costs more to borrow money, consumers cannot buy as much stuff, and a company’s revenue can decrease. If stocks tend to keep up with profits, higher rates also make the elevated price of stocks less attractive. Less risky assets, such as bonds, also pay more due to the rising interest rate of the Fed.

Stock for big tech companies and other sectors that have done well during the pandemic entered the year priced high, and are now likely to see some of the steepest drops as interest rates rise. But retailers, sensing a shift in consumer behaviour, could also suffer.

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The bond market is also seeing signs of a possible recession. The yield on two-year Treasury bonds temporarily surpassed the yield of 10-year Treasury bonds. That reversal, with higher yields for more short-term bonds, has typically been seen as an indicator of a recession, although the timeline for such a downturn is less certain.

According to the AP, Ryan Detrick, chief market strategist at LPL Financial, has said that when a bear market and a recession come together, the stock decline average is usually about 35 percent. When the economy manages to avoid recession, that number drops to about 24 percent.

Should I sell now?

While many advisers have said that riding the lows and highs are part and parcel of investment, stocks tend to provide strong returns over the long term. However, for those in need of money now, or looking to lock in their losses, the answer is yes.

Discarding stocks could help prevent further losses, but comes with the risk of forfeiting potential future gains. Often, bear markets, or the days following them, see some of the best days for Wall Street. In the middle of the 2007-2009 bear market, for example, there were two separate days when the S&P 500 jumped forward by about 11 percent. During and after the 2020 bear market, which lasted approximately one month, there were also leaps of more than 9 percent.

However, advisers suggest further stock investments only if that money will not be needed for several years, giving the market time to rise out of the bear markets and regain its value, then going on to new record highs.

Even during the 10-year period following the eruption of the dot-com bubble, a particularly difficult period, stocks have often gone on to reach high points within a couple of years.

How long will the bear market last? How bad will it get?

Since World War II, bear markets have typically taken 13 months to go from high to low, and 27 months to regain their previous value. The S&P 500 index has decreased by an average of 33 percent during bear markets in the same period. The steepest downswing since World War II occurred in the bear market that lasted from 2007 to 2009, when the S&P 500 decreased by 57 percent.

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Historically, bear markets that occur rapidly tend to be shallower, and stocks have usually taken a little more than eight months to fall into a bear market. During times when the S&P has dropped by 20 percent more rapidly, the average loss for the index has been 28 percent.

The longest bear market ended in March 1942 after just more than five years, dropping the index by 60 percent.

When can I be sure the bear market has ended?

Investors look for consistent gains during a six-month period, and an increase of 20 percent from a low point. Following a low in March 2020, for example, it took stocks less than three weeks for stocks to go up by 20 percent.

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Calgary breaks all-time record in housing starts but increasing demand keeps inventory low – CBC.ca

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Soaring housing demands in Calgary led to an all-time record for new residential builds last year, but inventory levels of completed and unsold units remained low due to demand outpacing supply.

According to the latest report from Canada Mortgage and Housing Corporation (CMHC), total housing starts increased by 13 per cent in Calgary, reaching a total of 19,579 units with growth across all dwelling types in the city.

That compares to a decline of 0.5 per cent overall for housing starts in the six major Canadian cities surveyed by CMHC.

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Calgary also had the highest housing starts by population.

“Part of the reason why we think that might have happened is that developers are responding to low vacancies in the rental market,” said Adebola Omosola, a housing economics specialist with CMHC.

“The population of Calgary is still growing, a record number of people moved here last year, and we still expect that to remain at least in the short term.”

Earlier this year, the Calgary Real Estate Board also predicted that demand, especially for rental apartments, wouldn’t let up any time soon. 

Industry can cope with demand, expert says

According to numbers from the report, average construction times were higher in 2023 for all dwelling types except for apartments.

The agency’s report suggests the increase in the number of under-construction residential projects might mean builders are operating at or near full capacity.

However, there’s optimism the construction industry can match the increasing need.

Brian Hahn, CEO of BILD Calgary Region, said despite concerns around about construction costs, project timelines and labour shortages, the industry has kept up with the demand for new builds.

Demand is expected to remain robust, but the construction industry can keep up, according to BILD Calgary region CEO Brian Hahn.
Demand is expected to remain robust, but the construction industry can keep up, according to BILD Calgary Region chief executive officer Brian Hahn. (Shaun Best/Reuters)

“I’ve heard that kind of conversation at the end of 2022 and I heard it in 2023,” Hahn said.

“Yet here we are early in 2024, and January and February were record numbers again.”

Hahn added he believes the current pace of construction will continue for at least the next six months and that the industry is looking at initiatives to attract more people to the trades.

Increase in row house and apartment construction

Construction growth was largely driven by new apartment projects, making up almost half of the housing starts in Calgary in 2023.

The federal housing agency says 9,034 apartment units were started that year, an increase of 17 per cent from the previous year. Of those, about 54 per cent were purpose-built rentals.

Apartments made up around two-thirds of all units under construction, CMHC said, with the total number of units under construction reaching 23,473.

Growth, however, was seen across all dwelling types. Row homes increased by 34 per cent from the previous year while groundbreaking on single-detached homes grew by two per cent.

“Notwithstanding challenges, our members and the industry counterparts that support them managed to produce a record amount of starts and completions,” Hahn said.

“I have little doubt that the industry will do their very best to keep pace at those levels.”

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Ottawa real estate: House starts down, apartments up in 2023 – CTV News Ottawa

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Rental housing dominated construction in Ottawa last year, according to a new report from the Canada Mortgage and Housing Corporation (CMHC).

Residential construction declined significantly in 2023, with housing starts dropping to 9,245 units, a 19.5 per cent decline from the record high observed in 2022. But while single-detached and row housing starts fell compared to 2022, new construction for rental units and condominiums rose.

“There’s been a shift toward rental construction over the past two years. Rental housing starts made up nearly one third of total starts in 2023, close to double the average of the previous five years,” the report stated.

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Apartment starts reached their highest level since the 1970s.

“The trend toward rental and condominium apartment construction follows increased demand in these market segments due to population growth, households looking for affordable options, and some seniors downsizing to smaller units,” the CMHC said.

Demand from international migration and students, the high cost of home ownership, and people moving to Ottawa from other parts of Ontario were the main drivers for rental housing starts in 2023. The CMHC says rental and condominium apartment starts made up 63 per cent of total starts in 2023, compared to the average of 37 per cent for the period 2018-2022.

There was a modest increase in rental housing starts in 2023 over the record-high seen the year prior and a jump in new condominiums. The report shows 5,846 new apartments were built in Ottawa last year, up 2.1 per cent compared to 2022.

Housing starts in Ottawa by year. (CMHC)

Big demand for condos

The CMHC said condo starts reached a new high in 2023, increasing 3 per cent from 2022 numbers.

“As of the end of 2023, there were only 13 completed and unsold condominium units, highlighting continued demand for new units,” the CMHC said.

Condominum starts increased in areas such as Chinatown, Hintonburg, Vanier and Alta Vista, as well as some suburban areas like Kanata, Stittsville, and western Orléans. Condo apartment construction declined in denser parts of the city like downtown, Lowertown and Centretown, the report says.

Taller buildings are also becoming more common, as the cranes dotting the skyline can attest. The CMHC notes that buildings with more than 20 storeys accounted for nearly 10 per cent of apartment structure starts in 2022 and 2023, compared to an average of 2 per cent over the 2017-2021 period. The number of units per building also rose 7 per cent compared to 2022.

Apartment building heights in Ottawa by year. (CMHC)

Single-detached home construction down significantly

The number of new single-detached homes built in Ottawa last year was the lowest level seen in the city since the mid 1990s, CMHC said.

“The Ottawa area experienced a slowdown in residential construction in 2023, driven by a significant decline in single-detached and row housing starts,” the CMHC said.

Single-detached housing starts were down 45 per cent compared to 2022. Row house starts dropped by 38 per cent compared to 2022, marking a third year of declines in a row.

“Demand for single-detached and row houses also declined in 2023. Higher mortgage rates and home prices have led to a shift in demand toward more affordable rental and condominium units,” the report said.

There were 1,535 single-detached housing starts in Ottawa last year, 208 new semi-detached homes and 1,678 new row houses.

The majority of single-detached and row housing starts were built in suburban communities such as Barrhaven, Stittsville, Kanata, Orléans and rural parts of the city.

“Increased construction costs resulting from higher financing rates and inflation that occurred in 2022 and 2023 contributed to the decline in construction in the region,” the CMHC said. 

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Trump’s media company ticker leads to fleeting windfall for some investors

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A man looks at a screen that displays trading information about shares of Truth Social and Trump Media & Technology Group, outside the Nasdaq Market site in New York City, U.S., March 26.Brendan McDermid/Reuters

Possible confusion over the new stock symbol for former President Donald Trump’s Truth Social (DJT-Q) saw some investor brokerage balances briefly jump by hundreds of thousands of dollars on Tuesday, the first day Trump’s “DJT” ticker traded.

Several people complained on social media about briefly seeing the value of their DJT stock holdings on Charles Schwab platforms inflated to figures more in line with what they would be worth if the shares traded at the level of the Dow Jones Transportation Average.

Some users said they faced a similar issue in pre-market hours on Morgan Stanley’s E*Trade trading platform.

Shares of Trump Media & Technology Group opened Tuesday at $70.90, while the Dow Jones Transportation Average started the session at 15,937.73 points.

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For one trader, the Schwab brokerage balance jumped by more than $1 million due to the error, according to a screen grab shared on social media platform X. Reuters was unable to contact the trader or independently verify the brokerage balance.

“It sure was nice seeing millions in the account, even if it wasn’t real,” another person, going by the username @DanielBenjamin8, who faced the issue in his E*Trade account, posted on X.

Two X users and one on Reddit surmised that the inflated balances were due to the ticker symbol for the company being nearly identical to the index.

A spokeswoman for Charles Schwab said that certain users on some of Schwab’s trading platforms saw their brokerage balances briefly inflated due to a technical issue.

The issue has been resolved and investors are able to trade equities and options on Schwab platforms, she said. Schwab declined to describe the exact cause of the issue.

E*Trade did not immediately respond to a request for comment outside of regular business hours.

Trump Media & Technology Group and S&P Dow Jones Indices, which maintains the Dow Jones Transportation Average Index, did not immediately comment on the issue.

While social media users said the issue appeared to have been resolved, many rued not being able to cash out their supposed gains from the error.

“I better go tell my boss that I’m actually not retiring,” the trader whose account balance had briefly jump by more than $1 million, wrote on X.

Trump Media & Technology Group shares surged more than 36% on Tuesday in their debut on the Nasdaq that comes more than two years since its merger with a blank-check firm was announced.

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