Every once in a while, the stock market sends a stern reminder to the investing community that equity valuations don't climb in a straight line -- even if 2021 made you believe they did. This has been one of those years. Since hitting their respective all-time highs between November 2021 and the first week of January, the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite have all entered a bear market, with peak drops ranging from 22% to 38%.

Although there are a lot of factors that have pushed Wall Street into the grips of a bear market, the bulk of the finger-pointing is rightly aimed at the Federal Reserve. In hindsight, the Fed's dovish monetary policy, including its decision to sustain quantitative easing measures (i.e., long-term bond-buying designed to keep lending rates low), was a key component of the runaway inflation rate experienced this year. With the nation's central bank aggressively hiking interest rates to tame inflation, it's removed the cheap capital that had fueled growth stocks for so long.

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Source Fool.com