As the stock market experiences remarkable fluctuations in the year 2025, the possibility of an incoming bear market frequently takes center stage in financial conversations. Even in stable conditions, talk of a looming bear market would not seem unusual, given that it’s been about time for Wall Street to witness one. The most recent instance of the S&P 500 in bear market territory was during a stretch from the beginning of January to mid-October in 2022.
Historically, Hartford Funds reports that bear markets surface approximately every three and a half years. With this time frame as a guide, it can be deduced that another bear market might be imminent within a year or potentially even earlier. The risks for an earlier occurrence are powered by uncertainties in the global market and anxieties over tariffs.
In an enlightening discussion in April, seasoned fund manager Ken Fisher projected the possibility of a bull market prevailing for the major part of 2025. Nonetheless, he expressed an encircling concern that the U.S. may be faced with a bear market and recession if an onset of trade war occurs under President Donald Trump’s administration.
Significant signals are evident in the stock market already this year, with a notable correction taking place. This entails a noticeable decrease to the tune of at least 10% from recently achieved market heights. In stark terms, a bear market comes into play when there’s a decrease of 20% in stock prices from recent peaks.
It becomes imperative for those apprehensive about a potential bear market to pay close attention to the S&P 500. Despite a minor upsurge recorded this year thanks to a late rally, the index plumbed to a 2025 closing low of 4,982.77 on April 8, tumbling down 19% from its closing peak of 6,144.15 recorded on Feb 19.
Such drastic decline in the market has set off alarms among financial experts, warning about an oncoming bear market. In the event that Wall Street does shift into bear territory, certain experts advise focusing on large cap stocks, especially those with solid profits and a dominant market presence.
Additionally, stocks that offer dividends could be worthwhile as they provide a stable source of income even in a downturn. As quoted by a trader based in Florida, it could be beneficial to ‘shed the weaker stocks, and rotate into companies demonstrating potent fundamentals.’
In anticipation of a bearish cycle, the following are five stocks to ponder about for acquisition, taking into account their crucial data points. Firstly, Alphabet (GOOG) stands with a closing price as of May 29 at $172.96, along with a five-year return of 142.08% and dividend yield, as of March 10, of 0.47%.
Another reputed technology company, Apple (AAPL), as of May 29, closed at $199.95. Its performance over five years yielded a return of 151.56%. The dividend yield, as reported on May 12, stood at 0.52%.
Moving to the fast food industry giant, McDonald’s Corp. (MCD), the closing price as recorded on May 29 was $311.86. The five-year return for the company was logged at 67.38%. As of May 29, the company offered a dividend yield of 2.26%.
Among software industry leaders, Microsoft (MSFT) exhibited a closing price of $458.68 on May 29. Its five-year return, calculated through the same date, rose to 150.30%, while the dividend yield declared on May 15 came out to be 0.72%.
Lastly, directing attention to the retail sector, Walmart (WMT) delivered a closing price of $97.10 as of May 29. Over five years, this multinational corporation managed a return of about 134.81%. The dividend yield announced on May 29 pointed to 0.97%.
These alternatives provide a spectrum of possibilities for investors looking to fortify their portfolios against potential market downturns. They are representative of diverse sectors – technology, fast-food industry, software, and retail, which ensures diversity and helps to balance the risk in a bear market.
It is essential to note that investing in a bear market requires careful analysis, comprehensive research, and taking into account investment objectives and risk tolerance. As a reminder, any investment decision should be made with a level-headed assessment of the prevailing market conditions and thorough understanding of the companies and sectors one plans to invest in.
This comprehensive look into the prospects of a bear market emanates from an understanding of historical data as well as current market dynamics. The final verdict, nonetheless, rests with myriad factors – domestic and global, that can toggle the balance of the stock market from a bull to a bear market in relatively short spans.
Thus, the anticipation of an impending bear market should be met with tenacity and strategic planning, with attention placed on robust stocks offering consistent returns and diversified sectors. It’s equipping oneself with knowledge and making informed decisions that contribute to sailing smoothly through financial turbulence.