The 2022 stock market decline was a short-lived bear market that impacted several equity indices around the world. While initially assuming the 2021 inflation surge to be “temporary” or “transitory,” many of the world’s central banks left policy rates unchanged near zero in 2021. When inflation proved to be much higher and stickier than originally expected, central banks rapidly tightened policy in 2022, hiking interest rates to their highest nominal levels since the 2000s. Many Wall Street investors, fearful of a recession, began selling off their securities holdings, causing a short-lived bear market. Most equity indices bottomed between late 2022 and early 2023, as investors began to bet on a soft landing. Economic data and corporate earnings had continued to come in strong during this period, and year-over-year inflation rates in the United States & Western Europe peaked in the summer & autumn of 2022. In 2023, stock markets rebounded and reached new records, driven by further disinflationary progress, central banks pivoting to dovishness and signaling lower interest rates ahead, and the AI boom driving a speculative mania into technology stocks.
In the United States, the bear market began on January 3, 2022 and ended on October 22, 2022; with the Dow Jones Industrial Average, the Nasdaq Composite, and the S&P 500 entered the bull market in November 2022, May 2023, and June 2023 respectively.[1] In Japan, the Nikkei 225 reached its highest level since 1990, in May 2023.[2] While 2022 was the worst year for Wall Street since 2008,[3] 2024 had at least 36 days of closing at record-breaking highs.[4]
