Stock Market Summary
Monday, January 11, 2016
- The first trading week of 2016 was quite painful for stock investors not only in the U.S., but also globally. The correction that started from the November 3 high accelerated rapidly last week sending stock prices broadly lower.
- The major market indices dropped sharply for the week. The S&P dropped just under 6%, while the Dow Jones Industrial Average declined more than 6%. The Nasdaq Composite suffered nearly a 7% decline. The Russell 2000, which struggled last year, continued its lackluster ways dropping nearly 8% last week.
- Since the March 2009 low, the S&P 500 has had corrections of 5% or more 19 times. The average decline has been 9.2%, while the median decline is 8.4%. The current correction beginning November 3, 2015 is down about 9.4%.
- The prior correction from May 20 – August 24, 2015 dropped 12.5%, which represents the largest correction since 2011.
- A list of reasons for last week’s decline: everything from oil prices, margin calls, North Korea to trading curbs by China that halted stock trading daily for numerous days causing liquidity issues, etc.
- In addition, it is also the time of the year when new valuations, outlooks and forecasts for companies are being made along with predictions for the economy by analysts and economists. Many institutions also use this time period to change their strategies, allocations to asset classes, sectors and industry groups and individual stocks.
- Earnings season is here again. The quantity of earnings reports will be low this week, but the number will soar in the coming weeks.
- The S&P 500 is above its late September low by nearly 3%. Due to the severity of last week’s selling, a cautious approach for the short term is wise, but the intermediate and long term trends remain higher.
Sources: bankrate.com, bloomberg.com, briefing.com, Dow Jones News, Financial Times, finviz.com, Investor's Business Daily, marketwatch.com, seekingalpha.com, Thomson Reuters/First Call, U.S. Dept of Treasury, yahoo.com and individual company web sites and press releases.
Leonetti & Associates, LLC views or opinions are as of a certain date and subject to change without notice. The material contained herein is for informational purposes only and obtained from sources we consider reliable. We make no guarantee as to its accuracy or completeness. References to specific securities and industries/sectors should not be considered recommendations to buy or sell any security or advisory service. Past performance is not a guarantee of future results.