Nasdaq Enters Official ‘Bear’ Territory For First Time Since ‘The Great Recession’
Just yesterday, Bloomberg reported on how one Goldman Sachs money manager with more than $1 trillion under his control is, despite the generally bearish sentiment among asset managers, bullish on equities for 2019.
The positive outlook for stock market opportunities comes in stark contrast to yesterday’s Nasdaq move into official bear territory. The technical definition of a bear market is a slide of more than 20% from the most recent peak. Yesterday’s close saw the Nasdaq 19.5% below the record high set on August 29th, but the day’s low took it beyond 20% at one point. The final loss for the day stood at 1.6%. The S&P 500 and Dow Jones Industrial Average, the other two major Wall Street benchmark indices are also officially in ‘correction’ territory, which means they are down more than 10% from their respective recent peaks.
The Nasdaq index has a particularly high weighting to technology stocks - the sector that has suffered most since October. The day had started positively with all three major indices up from their heavy Wednesday sell-offs, provoked by the Fed deciding to again raise interest rates by another 0.25%. Investors are concerned the benchmark is now being brought up too aggressively against the backdrop of evidence that economic growth is slowing. European and Asian equities markets, including the London Stock Exchange, have taken the lead set by their U.S.
The equities correction that has unfolded internationally since the summer has been attributed to concerns over a broad based global economic slowdown and accentuated by fears of the U
David Kelly, chief global strategist at JP Morgan Asset Management backed up that view, quoted in The Times today as saying:
“The market’s behaving like a two-year-old. The Federal Reserve is doing its job. You would need a recession to justify a US bear market and I don’t see [that] we’re anywhere close to a recession.”
If that does prove to be the case and markets are acting out with petulance and overselling, those investing online bravely now and buying the dip could position themselves well for 2019.
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