Thursday’s rally provided only temporary relief from the new year’s selling. Those gains got wiped out today, and then some as stocks made their way back to October 2014 levels.
The Dow Industrials have lost some 8.2% just in 2016. The Nasdaq saw its worst losses since 2008 after today’s session. This puts the major U.S. markets firmly in correction territory — that is, down 10% or more.
Generally, a 20% or more downturn in multiple broader market indexes (such as the Dow Industrials or S&P 500) is considered an entry into a bear market if it takes place over at least a two-month period.
We aren’t there right now. But we aren’t as far away as we want to be, either.
The small-cap Russell 2000 is firmly in bear territory, as it’s down more than 22% from its 52-week high. The same goes for the Dow Transportation Average, while the midcap S&P 400 Index is nearing bear levels.
Today BlackRock (BK) Chairman Larry Fink said the stock market could fall another 10%. With stocks already down 10%-plus, this would put us squarely into bear-market mode.
Fink also said oil could test $25. Considering that WTI crude closed today $29.42 per barrel, that’s not a far drop.
Of course, as it’s often said, this isn’t a stock market but rather a market of stocks. We take our job seriously to uncover the best and avoid the rest … and to acknowledge but also maneuver around the broader mayhem.
One way to do that is with precious metals. And today was a good day for gold, with a nice $17 gain amid the sea of red across the board. We wouldn’t say a correction/bear market in stocks will start a bull market for gold. But if you’re looking for a shining lining in the current bloodbath, you could do a lot worse than gold (and Treasuries, for that matter).