Stocks in 2022 are off to a terrible start, with the S&P 500 down close to 20% since the start of the year as of May 23.
High inflation. U.S. inflation remains high. Inflation is the rate of change in goods and services prices over time, and prices have been rising, adding to stock market volatility.
Rising interest rates. As long-term inflation is a serious economic worry, the Federal Reserve will likely continue to tighten monetary policy.
Russia's invasion of Ukraine has contributed to short-term stock market volatility in the U.S. and around the world.
Supply chain issues. COVID-19 causes supply chain interruptions. Even though the U.S. economy seems to have weathered the pandemic, global supply chain issues remain.
Unsustainable labor costs.
Some good news is that the unemployment rate remained at 3.6% in April, the lowest rate since February 2020.
Weak earnings. Multiple challenges face companies. Inflation puts pressure on corporate earnings, and as the Fed becomes more hawkish, riskier assets like stocks suffer.
China's economic drag.
China's zero-COVID-19 policy is having a harsh impact on the country's economic outlook.