To The Moon

After a three-year hiatus, the Golden State Warriors are the best team in basketball again -- and they had to navigate an injury-driven tumble from the top to the absolute bottom to do it. There's a lesson in there about bear markets, recessions, and all the fears gripping investors right now.

After the stock market's tumble this past week, investors probably feel like Warriors star Stephen Curry in 2020 asking what else could possibly go wrong. The S&P 500 dropped 5.8%, its worst weekly decline since March 2020, while the Dow Jones Industrial Average and the Nasdaq Composite both fell 4.8%.

It was "the worst stretch of selling in the history of the S&P 500," according to Sundial Capital Research's Jason Goepfert, who noted that there were five days since June 8 when more than 90% of the index's stocks finished lower. The question now is how much more can go wrong.

Plenty. The week's drop, which sent the S&P 500 into a bear market, was caused by rising bond yields, some weak economic data, and, of course, the Federal Reserve, which raised interest rates by three-quarters of a point for the first time since 1994.

And there's more where that came from. The Fed, battling inflation unlike any it has seen in the past 40 years, could raise interest rates higher than currently expected -- there's a 89% chance of another three-quarter-point increase in July, although the chances of that happening in September are much lower -- while signs of an economic slowdown emerged this past week as housing starts fell 14% month over month in May and retail sales dipped 0.3%.