U.S. Stocks Tumble, Cap Worst Five-Day Start to Year Since 1928

[marmar]

(Bloomberg) U.S. stocks fell for a third day, tumbling in a late-afternoon selloff that sent major equity indexes to their worst weekly declines in more than four years, as investors found little relief in moves by China to restore calm to its sinking markets and data that showed resilience in the U.S labor market.

Bank stocks led the late-Friday declines, with JPMorgan Chase & Co. and Citigroup Inc. falling at least 2.2 percent to cap the week with drops of more than 10 percent. Energy shares in the Standard & Poor’s 500 Index lost 1.3 percent to press deeper into five-year lows. Seven of the benchmark’s 10 main industries sank more than 5.5 percent this week.

The S&P 500 dropped 1.1 percent to 1,922.03 at 4 p.m. in New York. The gauge fell 6 percent this week. The Dow Jones Industrial Average sank 167.65 points, or 1 percent, to 16,346.45, and lost more than 1,000 points this week. The Nasdaq Composite Index declined 1 percent, stretching its losing streak to seven days, the longest since 2011.

“We’re still in a risk-off mentality,” said Mark Spellman, a fund manager who helps oversee more than $4 billion at Alpine Funds in Purchase, New York. “I think any kind of risk-on trade mentality that comes in is going to be short-lived until global economic growth improves. It’s not a great time to pile in right now.” ..............(more)

http://www.bloomberg.com/news/articles/2016-01-08/u-s-index-futures-signal-rebound-as-yuan-fixing-soothes-nerves

[safeinOhio]

1. Good time to buy.

Never sell on fear.

[CajunBlazer]

2. The losers in the stock market always buy high and sell low...

....which means they buy stocks when most have already bought in (Oh, look how great the market is doing; don't want to get left out) and then panic and sell on dips.

Stock markets are not rational. While investors in the Chinese stock market are panicking, the American economy is on very sound footing with no major indicators signaling an approaching down turn. Now world's economies are inter-related, but markets are prone to over reaction, especially with computer programs governing the buying and selling of stocks for large funds based on predetermined parameters.

Last year the S&P lost almost 11%, also as a result of bad news from China, and ultimately recovered all of its losses except perhaps around 1%. This too will pass.

[Yavin4]

3. If you bought in 2009, then you would be doing very well today.

That's when Obama took office and everyone thought that Mad Max world was just around the corner.

[flamingdem]

5. This is probably another buying opportunity

But people are contemplating jumping out of windows currently so it seems like a disaster.

[Yavin4]

12. I know. I bought right before this down turn.

Feel good about my position. Going to buy more this week.

[marmar]

4. Not so sure about your assertion about no major indicators

http://wolfstreet.com/2016/01/08/the-sky-is-falling-on-california-manufacturing-worst-since-february-2009-may-drag-regional-economy-into-recession/

http://wolfstreet.com/2016/01/07/rail-volumes-at-recessionary-levels/

http://wolfstreet.com/2016/01/06/defaults-and-restructuring-next-for-retailers/

http://www.latimes.com/business/la-fi-macys-retail-20160108-story.html

http://wolfstreet.com/2016/01/06/global-corporate-debt-is-coming-unglued/

http://wolfstreet.com/2016/01/03/it-starts-tech-trouble-mucks-up-silicon-valley-real-estate-party/

http://wolfstreet.com/2015/12/31/business-in-the-midwest-takes-worst-hit-since-july-2009/

[CajunBlazer]

6. Wolfstreet and the LA times are not indicators, they are publications.

And I never heard of "Wolfstreet" before.

The major indicators of a coming recession that I look for are:

1. Tight Money - while the Fed recently increased bank to bank interest rates, its policies remain very accommodative.

2. Inverted interest rate curve, where short term rates are higher than long term rates - we are not close.

3. High inflation - duh!

4. Rapid Growth - nope, GNP is still growing very slowly

5. Stock Market overvaluation - Stocks are averaging 16.0 to 16.5 price to earning ratio, about right for the market in a low inflation atmosphere.

In any situation you can always find some "expert" writing that the "sky is falling" or "the market is about to go up like a rocket". By all means sell on the downturn if you are that uncomfortable.

[marmar]

7. The indicators are detailed in the stories. I didn't think it was that obtuse a concept.

[CajunBlazer]

8. Let my remind you of the title of your post.....

"Not so sure about your assertion about no major indicators"

And I pointed out that the articles you posted links to were not indicators. Nor are the statistics or rhetorical events outlined in the articles "major" indicators when it comes to analyzing the stock market. One market segment is just that - a segment.

For instance - yes if you were dumb enough to invest in coal and petro companies, you probably got yours handed to you last year. (And it serves you right if you bet against clean energy.) However, since consumers dominate approximately 70% of our country's economy, with gas prices so low they have money to buy other things.

In addition, in case you haven't heard we had a great job numbers report this morning. Both unemployment and underemployment are down near historical levels again. Wages are slowly climbing again. All in all more people will have more money to buy stuff and that is good for the county's economy.

But again, if you are uncomfortable - by all means sell - I'm buying.

[marmar]

9. Ah, so it's literalist Friday? .... OK.

[CajunBlazer]

10. No, I realized that was a little short with you - sorry -so I edited the post you just replied to...

read it again.

[Yavin4]

13. I would add to your list: Too much debt

Because this recovery has been exceedingly slow, we're not over-leveraged as we were in 2007/08.

[B Calm]

11. What bothers me is that if someone in China sneezes it effects our stock market. Last year it

was Greece.