The S&P 500 Drops 1.42%

Today was a rotten day for the stock market, and an afternoon rally saved it from being even more rotten. The S&P 500 lost 1.42% on the day although at its lowest, the index was off by 2.74%.

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The Energy sector was the only sector to close in the green but that was by just 0.07%. Oil crossed above $30p per barrel. The big loser was the Materials sector which lost 2.71%. The Financials lost 2.64%. Many of the big banks did especially poorly today as a number of them hit their lowest point in more than two years. Citigroup and Bank of America were both off by more than 5%, and Morgan Stanley lost nearly 7%.

The pain in the big banks is being caused by an emerging banking mess in Europe. Several banks there have some bum energy loans so they need to ditch assets to raise capital. Deutsche Bank is going for about 30% of its book value.

The recent low for the S&P 500 came on January 20. Today’s low is still above that low, but the small-cap Russell 2000 did make a new two-and-a-half-year low.

The bond market did very well today. The 10-year yield dropped below 1.75%. The yield is near its low from almost exactly one year ago. The bond market has been creaming stocks over the last six weeks.

Posted by on February 8th, 2016 at 9:49 pm


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