![\"In](\"https:\/\/www.goandgrow.eu\/blog\/wp-content\/uploads\/image-1009.png\")
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Just how bad has the stock market been doing in 2022?<\/h2>\n\n\n\n
As of late May 2022, the S&P 500<\/a> is down just under 17% since the start of the new year. (This index comprised the 500 largest companies listed on U.S. stock exchanges.) The NASDAQ, the second\/largest stock exchange after the New York Stock Exchange (NYSE), is nursing even deeper wounds, suffering year-to-date losses of more than 28%<\/a>.<\/p>\n\n\n\n After a protracted period of low interest rates, the U.S. Federal Reserve\u2019s decision to implement two rate hikes sent the markets in reverse. An increase in interest rates means it\u2019s more expensive for companies to borrow money; this additional expense can slow economic growth and negatively impact earnings, leading to lower stock prices.<\/p>\n\n\n\n One of the driving forces behind the Federal Reserve\u2019s rate hikes in 2022 is the record inflation ravaging the U.S. However, inflation isn\u2019t a problem exclusive to the U.S., and many other countries appear poised to follow suit \u2013 if they haven\u2019t already. In the Euro area, inflation is up to 7.5%<\/a>. ECB President Christine Lagarde has completely changed her tune from earlier this year and has all but committed to increasing interest rates in Q3 2022.<\/p>\n\n\n\n With inflation and rates on the rise, stocks are clearly more volatile, especially with all the buzz around stagflation<\/a>. The fear of a lagging economy and chronic inflation would be a perfect storm to send stocks into free fall. In 2022, the mere possibility of this dreaded phenomenon has sent investors fleeing to safe-haven assets like government bonds<\/a>.<\/p>\n\n\n\n <\/p>\n\n\n\n The first wave of COVID-19 in early 2020 sparked worldwide shutdowns and saw global economies grind to a screeching halt. Meanwhile, the stock market recorded the worst Q1 of all time<\/a>, dredging up painful memories reminiscent of the 2008 financial crisis.<\/p>\n\n\n\n As governments distributed stimulus checks to keep economies afloat, individuals poured these funds into the stock market. Now that interest rates are on the rise and the stimulus checks have dried up, the stock market drop may be a more accurate picture of investor sentiment.<\/p>\n\n\n\n Though most countries have done away with lockdowns, China, the world\u2019s largest exporter, and second-largest economy, continues to enforce lockdowns in some of its largest cities, like Shanghai and Beijing. Chinese stocks have tumbled<\/a> into a bear market territory, and the lockdowns have sent shockwaves across the globe.<\/p>\n\n\n\n We\u2019ve all heard the grumblings from businesses and consumers about the challenges of the supply chain and how they\u2019re responsible for delays on just about everything. The supply chain begins with raw materials, which, as you may have guessed, often takes us right back to China.<\/p>\n\n\n\n Initially, these supply chain issues started when demand for goods soared following lockdowns being lifted. During the lockdowns, manufacturing companies had to scale back their operations to survive, decreasing output and adjusting to lower demand.<\/p>\n\n\n\n When the lockdowns ended and demand suddenly skyrocketed, producers could not meet this demand or scale up to increase production. Combine this with extremely tight labor markets and that manufacturing facilities are limited by how much their machines can produce in 24 hours, and you have a global supply shortage. So, manufacturers do the only thing they can \u2013 raise prices. Higher prices and slower delivery times can hinder growth, which, as we know, can hurt stock prices.<\/p>\n\n\n\n <\/p>\n\n\n\n The ongoing conflict in Ukraine is driving short-term volatility in stocks, likely made worse by Europe\u2019s dependence on Russian energy. Russia\u2019s military strength and geopolitical influence have stoked investors\u2019 fears, while global sanctions on Russian trade have fueled energy supply shocks.<\/p>\n\n\n\n As the world looks to avoid Russian oil, other foreign suppliers are raising their prices, with the energy demand far exceeding the available supply. This imbalance has resulted in more inflation, which, as we know, can prevent growth. Furthermore, inflation \u2013 driven primarily by energy \u2013 is prompting central banks to raise interest rates, which certainly isn\u2019t doing any favors for GDP growth.<\/p>\n\n\n\n<\/a>Inflation and rising interest rates are slowing growth<\/h2>\n\n\n\n
![\"Inflation](\"https:\/\/www.goandgrow.eu\/blog\/wp-content\/uploads\/image-1010.png\")
Lingering COVID-19 concerns and lockdowns in China<\/h2>\n\n\n\n
<\/a>Supply chain snags continue to plague nearly every industry<\/h2>\n\n\n\n
![\"Global](\"https:\/\/www.goandgrow.eu\/blog\/wp-content\/uploads\/image-1011.png\")
The war in Ukraine and oil supply shocks<\/h2>\n\n\n\n
<\/a>Corporate revenue and earnings misses<\/h2>\n\n\n\n