The Stock Market Is Charting a New Course. It Won’t Be Pleasant.

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Delta Air Lines told investors that revenue would finally return to 2019 levels, amid strong travel demand.

Brandon Bell/Getty Images

The trend is your friend, or so they say. But right now, there is no trend you can trust.

Consider the stock market this past holiday-shortened week. Through the first three days of trading, the

S&P 500
index looked like it was going to be able to start a winning streak after breaking a seven-day losing streak the week before. Instead, it finished down 1.2%. The

Nasdaq Composite,
which closed off 1%, and the

Dow Jones Industrial Average,
which fell 0.9%, followed similar trajectories.

It’s not just the stock indexes that failed to follow the trend–bond yields did, too. The 10-year yield looked like it was heading lower after trading at 3.13% on May 6. But after closing at 2.748% on May 27, it rose back to 2.955% on Friday after a stronger-than-expected jobs report suggested that recession fears might be overblown.

“The growth scare that brought 10-year Treasury yields down from touching 3%” is easing “as the labor market remains solid,” explains Quincy Krosby, chief equity strategist at LPL Financial. That’s helping yields rise again.

It’s no easier finding a trend in U.S. businesses.


(ticker: MSFT) cut its outlook, blaming the strong dollar, while

Delta Air Lines

(DAL) told investors that revenue would finally return to 2019 levels, amid strong travel demand.


(TSLA) CEO Elon Musk was reported to have said the company needs to eliminate 10% of its workforce, as

Ford Motor

(F) and


(WMT) announced plans to hire thousands of workers.

Even trendy stocks are having trouble staying that way.


(AAPL), after looking like a bulwark in a scary tech tape, fell 2.85% this past week after Morgan Stanley raised concerns about its App Store. It’s now down 18% in 2022. Momentum stocks–by definition the best performers–have also been getting hit, with the

iShares Edge MSCI USA Momentum Factor
exchange-traded fund (MTUM) declining 20% in 2022.

But it’s the shifting longer-term trends that really need to be watched, according to Richard Bernstein, founder of Richard Bernstein Advisors. He notes that tech and the tech-like companies in the communication-services and consumer-discretionary sectors benzefited from low interest rates, low inflation, and too much money seeking a home. Now, the economy is dealing with high inflation, rising rates, and a Federal Reserve that is draining liquidity from the market. The stocks that outperform won’t be the same ones that did so well before, even if investors are reluctant to give up on their past winners.

“The leadership going into a bear market is rarely, if ever, the leadership coming out,” Bernstein explains. “Because of this rule of thumb, we view bear markets as periods of extreme opportunity.”

But that will require patience–and rejecting the trends of the past. For Stifel strategist Barry Bannister, that means favoring active management over index funds, international over the U.S., and small stocks over large, More than anything, succeeding in the stock market will mean “navigating a decade of generational macro change,” he writes.

Are you ready to make a new friend?

Write to Ben Levisohn at

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