If I told you we are in the middle of a bear market you might wonder what I was talking about. The Dow is only down about 4.5% YTD, and the S&P is down a little more than 1% for the year. That doesn’t sound that bad, does it? Unfortunately, underneath the surface there has been a lot of damage. I have referred to this year’s action as a “rolling correction” in recent updates, but it is becoming a bit more than that. To date, more than half the stocks in the S&P are in “correction mode”, which means that they are down more than 10%. In addition, more than a quarter of the stocks in the S&P are in a “bear market “, which means that they are down more than 20% from the highs. The majority of the energy stocks now find themselves in a bear market, and even a stalwart liked Exxon Mobile is down 17% for the year, and down almost 30% from last year’s high.
Today’s action was disturbing for the bulls. Stocks fell early and often, and rallies were met with new waves of selling. By the close, the Dow Jones Industrial Average was down 358 points to finish the day at 16,990. The S&P 500 was down 43 points to close at 2035. Gold was up $22 to trade at $1150 per ounce, while oil was up $.34 to trade at $40.94 per barrel WTI.
On the economic front, the weekly jobless claims number came in as expected, so no real damage there. Will the Fed have the blinders on when it comes to the markets and a possible rate hike? Well, for the past several years they have seemed obsessed by the markets. The stock market was screaming loud and clear today- don’t raise rates. Let’s see if the bulls can stop the bleeding tomorrow.
Have a nice evening everyone.