To say it?s been a rough start to 2008 for investors would be a massive understatement.
In the 13 trading sessions of the new year, the Dow Jones Industrial Average has fallen nearly 9 percent, while the Standard & Poor?s 500 has lost 9.75 percent and the Nasdaq index about 12 percent. January is setting up to be one of the worst opening months in the history of the market.
“This is more than I would have expected,” said Joel N. Morse, a professor of finance at the Merrick School of Business at the University of Baltimore. “January is normally a very good month for the stock market.”
Uncertainty is spreading among investors, even as President Bush last week announced a $145 billion stimulus plan to boost the economy and keep it from falling into a recession.
“Market sentiment is very poor,” said E. William Stone, chief investment strategist for PNC.
The percentage of stocks trading above their 200-day average is just 15 percent, which is the worst percentage since 1998, Stone said.
According to a survey of the American Association of Individual Investors during the second week of January, 58.9 percent were”bearish,” while 19.6 percent were “bullish,” a difference of 39 percent and the largest gap since 1990.
The market could turn for the better quickly, Stone said, pointing to last week?s up-and-down movements. The market spiked 200 points last Monday on IBM?s strong earnings and then fell 200 points the next day on Citigroup?s poor financial reports.
“It clearly doesn?t take much to spur the market to jump or fall drastically,” Stone said. “Investors and market watchers need a glimmer of positive news to counteract the one-day-up, two-days-down momentum.”
January has seen five days of 200-point movements in the market, Stone said. There were 27 sessions of 200-point movements in all of 2007.
Morse remained confident the market would ultimately rebound.
“In the long term, this is no big deal,” Morse said. “People should always have some stocks in their portfolio.”
The Associated Press contributed to this article.
