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U.S. Stock Market Volatility in 2022

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The U.S. stock market has experienced a turbulent ride in 2022. Despite a remarkable rise since the beginning of the year, it has been far from smooth sailing.

Analysis from Bespoke Investment Group reveals that the S&P 500 has seen a higher than average number of 1% swings in either direction this year, with over 30% of trading days experiencing exaggerated market movements. Only three years since 2010 have had a higher percentage of swings: 2011, 2020, and 2022.

This marks a significant departure from the period following the great financial crisis, where stocks steadily climbed higher with relatively subdued intraday volatility. In 2017, for example, there were only eight sessions where the S&P 500 recorded gains or losses exceeding 1%, which is the lowest number in decades.

By contrast, the S&P 500 saw 122 swings of 1% or greater in 2022, the highest number for a single year since 2008.

However, investors can look forward to a period of relative calm during the summer months. Historically, July typically experiences the smallest number of 1%+ swings, comparable to December when markets are largely dormant between Christmas and New Year’s Eve.

According to the Bespoke team, this relative calm is expected to persist throughout most of the summer until activity picks up once again in the fall.

Currently, the S&P 500 has risen by nearly 18% this year and is approaching its all-time intraday high of 4,818.62 points. Similarly, the Nasdaq Composite has rebounded by more than 36% from its selloff in 2022 and is now within reach of its own intraday high reached on November 22, 2021.

On the other hand, the Dow Jones Industrial Average, which outperformed in 2022 during the worst year for stocks since 2008, has lagged behind this year with a modest rise of 0.3%.

In conclusion, although the U.S. stock market has encountered volatility in 2022, the overall trajectory has been positive, with the market showing resilience and potential for growth in the coming months.

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