The S&P 500 declined approximately 25.4% from its January 2022 peak to its October 2022 low.
The decline was driven by a combination of high inflation, rapidly rising interest rates, tighter financial conditions, and concerns about slowing economic growth. The Federal Reserve raised its federal funds target repeatedly during 2022, ending a long period of exceptionally low rates.
The index entered a bear market when it fell at least 20% from its record closing high. Its low came on October 12, 2022, at 3,577.03. The technology-heavy Nasdaq Composite fell more sharply because higher interest rates reduced the present value investors assigned to expected future growth.
A bear market is defined by the size of the decline, not necessarily by a recession. The 2022 market decline therefore should not be treated as proof that a recession had already begun. Market indexes also recovered unevenly after the October low.