Bear Market in Stocks Confirmed


A Bear market is confirmed when an index sinks 20% or more below its most recent closing high.

For the 2nd time this week, the S&P 500 triggered a 15-min trading halt after falling by 7.0% shortly after the open following more economic disruptions caused by the coronavirus.

Note: New Yahoo News/YouGov poll shows Republicans largely dismiss threat of coronavirus.

Few asset classes were safe Thursday.

The S&P 500 sectors lost between 7.4% (health care) and 12.3% (energy).

WTI Crude Oil fell 4.3%, or 1.43, to 31.57 bbl.

Gold futures fell 3.2% to 1589.80 oz.

The 2-yr Treasury yield was unchanged at 0.49%, and the 10-yr yield increased 3bpts to 0.85% on selling pressure.

The US Dollar (.DXY) Index rose 0.8% at 97.25.

Notably, the S&P 500 cut its intra-day decline to 2.9% after the New York Fed announced repurchase operations totaling more than $1.5-T, while stocks in Europe accelerated losses following a lackluster ECB response. 

The ECB did not cut its key policy rates, and instead announced additional net asset purchases through the end of the year with additional longer-term refinancing operations.

It is encouraging that central banks are committed in ensuring ample liquidity in these trading conditions, it is unlikely that the measures will boost consumer confidence.

The reported disagreements between Republicans and Democrats regarding a stimulus plan only exacerbated the sour mood on Wall Street. 

Progress is reportedly being made with the US Senate to remain in session next week instead of going on recess.

President Trump is expected to sign a declaration to unlock more funding to fight COVID-19, according our sources. 

The market wants strong and immediate action, as well as signs that the coronavirus situation will get better.

The CBOE Volatility Index, VIX, aka the fear gauge, rose 40.0% to 75.47, its highest mark since the financial crisis as investors opted for more protection against further equity weakness.

Thursday, the major US stock market indexes finished at: DJIA -2352.60 at 21200.72, NAS Comp -750.25 at 7201.81, S&P 500 -260.74 at 2480.64

Volume: Trade on the NYSE came in at 2.2-B/shares exchanged

  • NAS Comp -19.7% YTD
  • S&P 500 -23.2% YTD
  • DJIA -25.7% YTD
  • Russell 2000 -32.7% YTD

HeffX-LTN’s overall technical outlook for the major US stock market indexes is Bearish in here.

Looking Ahead: Investors will receive the preliminary University of Michigan Index of Consumer Sentiment for March and Export and Import Prices for February Friday.

The Fed is expected to cut interest rates for the second time this month at the conclusion of its 2-day monetary policy scheduled for next week.

Stay tuned…