It’s been an ugly start to the year in the stock market, and many on Wall Street are bracing for it to get even uglier. On Jan. 25 the S&P 500 index was almost 10% below its last high, which was reached on the first trading day of 2022. The Nasdaq-100 index was off nearly 15% from its peak in November, while the Russell 2000 Index of smaller companies was down almost 18% from its latest high.
Market pundits seemed more shaken than those numbers alone would suggest, with talk of long winters and bursting bubbles even amid late-in-the-day rallies as traders tried to “buy the dip.” Perhaps that’s because there’s a sense that the markets are, for the first time in a while, going to have to grit out losses without help from an accommodating U.S. Federal Reserve. And while companies themselves are healthy—with strong balance sheets that could eventually help put a floor under equity losses—the long-reigning expectation that risky assets will mostly go up seems to have been broken.