MOSCOW, 25 Dec — the Dow Jones. Investors find it increasingly difficult to hide from the accelerating decline in the U.S. stock market.
The S&P 500 and Dow Jones Industrial Average was down 19% from their recent highs and are on the verge of 20% drop, which would mean the onset of a bear market and the termination of the long-running bull market rally in history.
The technological index Nasdaq Composite index small capitalization Russell 2000 and Dow Jones Transportation Average has already appeared on the territory of a bear market, as 7 of the 11 more General sectors in the S&P 500, traded and popular exchange-traded funds, reflecting the dynamics of housing markets and retail trade.
Only protective sectors of the S&P 500 utility sector, real estate, healthcare and consumer goods, is characterized by stable dividends, while avoiding the same sharp decline. However, they all retreated at least 9% from their recent highs.
“I’ve never seen managers so shocked and embarrassed, said Robert Duggan, senior portfolio Manager at SkyBridge Capital, investment. In the last two weeks, market participants tend to close and sell off their positions.”
Concern about the future direction of interest-rate policy U.S. Federal reserve weighed on financial sector stocks. Meanwhile, the paper commodity companies and sectors and industrial firms have been particularly affected by growing trade tensions with China. Oil and gas sector shares fell on the background of a 44% fall in oil prices since the beginning of October.
All 11 sectors in the S&P 500 are moving to end the year with losses for the first time since 2008, a worrisome sign from the point of view of durability it’s almost 10-year-old bull market.
Brian Conlon, founder and portfolio Manager of Manor Bridge Capital, said that reduces the time frame of their trades, and trying to find paper that is sensitive to geopolitical news causing volatility in the markets. He added that trades individual stocks that he believes are oversold, including Apple Inc. Square Inc., Nvidia Corp. and Johnson & Johnson.
Meanwhile economists monitor any signs of a slowdown in U. S. consumer confidence, or consumer spending, the main driver of the U.S. economy, providing about two-thirds of GDP.
Individual investors have begun to worry about the stock market. About 47% of those surveyed by the American Association of individual investors believe that share prices in the next 6 months will fall. This is one of the most pessimistic results of this survey in recent years. Only 25% of respondents expect price increases in this period.
“Consumers are still supported by the US, preventing a sharper slowdown in the global economy, said Gregory Daco, chief economist at U.S. consulting firm Oxford Economics. — If the US economy will start to slow down at this stage, it will speed up the overall weakening of growth in the world.”
To a significant extent, the recent volatility in the markets was due to the fact that the world’s Central banks have started scaling down their large-scale purchases of bonds. These programs supported multi-year rally in global shares market and deter market volatility. The fed’s balance sheet on the financial crisis swelled to 4.5 trillion dollars as the Central Bank buying government and mortgage debt to support economic growth.
This year has been particularly hard hit financial sector stocks, which fell 20% amid uncertainty about the future dynamics of interest rates and regulation.
Despite the overall market downturn this year, most economists believe that the probability of a recession in the next year is small. However, they are less likely to believe that the economy can continue to grow at the same dizzying rate as in 2018.
“Investors often forget that the bearish trend in the stock market as a whole or in some of its sectors does not mean that the economy is entering a recession,” said Duggan.
— Author Jessica Menton [email protected]; translation PRIME; +7 (495) 645-37-00; dowjonesteam @ 1prime.biz
Dow Jones Newswires, PRIME
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