The S&P 500 is down more than 20% since the start of year. Inflation is skyrocketing. And talks of a recession are beginning to heat up. But how low will the stock market go? Is this a sign of the times to come or can the American economy recover quicker than expectations suggest?

No matter which direction you look, it’s difficult to find many positive investment movements at the current moment. Traditional stocks are taking one hit after another. The crypto market has crashed on multiple occassions and its star, Bitcoin, is trading around $20,000 for the first time since 2020. And consumers and investors alike are looking for answers.

Market uncertainty and the current volatility is a major cause for concern. But let’s take a deeper look at why the stock market is diving with little to no signs of slowing down.

How Low Will the Stock Market Go From Here?

Can it get any worse? Many young investors have never seen such difficult times in the stock market. In fact, the pandemic investment rush made it seem as if investing was easy. New investors came into the market and stocks began to flourish once COVID-19 restrictions were lessened or removed altogether. Life returned to somewhat normalcy and the market responded.

However, now we’re asking how low will the stock market go just months after the surges that revitalized the market. And unfortunately, it will take more time before the picture becomes clearer. So how did we get here in the first place?

It’s somewhat of a domino effect. And the Russia-Ukraine war was one of the first dominos. Geopolitical tension has caused global market uncertainty, supply chain shortages and the highest inflation rates that we have seen in decades. For example, gas prices are hitting record highs. Oh, and its nearly impossible for parents to find baby formula due to production stoppages and shortages around the world. These are just two examples on opposite ends of the spectrum. As you can imagine, there are many more concerns inbetween that are also having an effect on the market.

Surging prices are squeezing the pockets of family households. Moreover, it’s cutting into company profits. And stock prices are beginning to fall as a result.

Will Stocks Recover?

How low will the stock market go and and in what timeframe? Some analysts believe its only a matter of months before the market recovers. Others say we better buckle up and hold on tight for even more difficult times. And a lot of this sentiment is due to decisions that have yet to come. For instance, the Federal Reserve just released its latest move to fight inflation.

The Fed announced its raising interest rates by 0.75%. That’s the largest move its made since 1994. And the stock market rallied shortly after. This is due to the hardened stance that the central bank is taking on inflation. And expectations suggest Fed policymakers will raise interest rates by another 1.75% across the remainder of the year, in which they meet four more times.

Now this doesnn’t immediately mean the market is destined to recover quickly. Federal Reserve Chair Jerome Powell noted how difficult this is due to the variety of factors at play.

“I think events of the last few months have raised the degree of difficulty, created great challenges,” Powell said during a press conference shortly after the decision was made. “And there’s a much bigger chance now that it will depend on factors that we don’t control.”

Investing During a Bear Market

Investing has always come with varying levels of risks and rewards. However, the margin for error becomes smaller when the market is in a downturn. Volatility rises and so do the risks for investors. In addition, the opportunities for gains become fewer and fewer. And that is why it’s so important to do your research and due diligence before making any investment decisions.

You can start by relying on expert analysis and insights. Find one of the best investment newsletters that matches your investment interests and goals. You can receive daily stock analysis from Wall Street gurus that have experience overcoming bear markets and balancing portfolios.

So, how low will the stock market go from here after a difficult Spring has bled into the Summer? You are going to want to keep a close eye on everything from world events and news cycles to interest rate hikes and supply chains. It’s going to take a lot of moving parts for the economy to get back on track. In the meantime, you will have to be more aggressive in your reseearch and more decisive in your decision making to find the best investment opportunities for your portfolio.