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Published: May 19, 2022 6 min read

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The S&P 500 is very close to a bear market, and your portfolio is likely feeling the pain. Just how bad are things going? And what, if anything, should investors do to adjust for a bear market?

On Wednesday, the S&P 500 — an index commonly used to measure the stock market overall — fell 4%. That's the largest one-day drop since 2020, placing the index at 18% below its January high. To enter a bear market, the S&P 500 would need to plummet to 20% below its last high.

The index is teetering on the edge of a bear market, and investors are understandably worried amid major selloffs in recent weeks.

The Dow Jones Industrial Average suffered its worst selloff in nearly two years on Wednesday, and the Nasdaq Composite fell 4.7%. Stocks and other financial assets, like cryptocurrency, have been struggling as the Federal Reserve hikes interest rates in an effort to control rising inflation. Disappointing quarterly earnings reports from Target and Walmart added to the pressure this week, as the retailers reported grappling with rising costs. The stock prices of both companies fell steeply after the earnings were reported.

"This feels extremely uncomfortable because of how spoiled we were," says Ryan Detrick, chief market strategist at LPL Financial, in light of the way the market doubled in value from its March 2020 low to the summer of 2021 and the relative ease with which investors could make money over the last few years.