Tags: Sharp Stock Correction Inspires Talk of Bear Market

Sharp Stock Drops Stir Fear of Bear Market

By    |   Tuesday, 22 Jun 2010 08:56 AM

During the recent stock market drops, share prices fell faster and further than any other period early in an economic recovery since 1950.

The Standard & Poor’s 500 Stock Index dropped 13.7 percent in the 45 day after its April 23 peak.

That’s enough to make some experts worry that a bear market is coming.

"This correction has had more legs than we thought," Tim Hayes, chief investment strategist for Ned Davis Research, told The Wall Street Journal.

While many indicators point to a temporary correction, "we could actually be in a bear market now," Hayes said.

That would mean a 20 percent drop by the S&P 500 from the April high, to 974. The index recently stood at 1,110.

Stock market declines are rare during the first 18 months of an economic rebound, but investors are worried about Europe’s debt crisis and our own debt explosion.

Given the market’s strength before the correction, a resumption of the rally is likely, Hayes and Bespoke Investment Group co-founder Justin Walters told the Journal.

But if "we hit a new low, the odds are really high that we will go into a bear market, based on the historical numbers," Walters said.

Gains in recent days have reassured some investors.

“The data give support to a modest recovery and where the market is today,” Tom Wirth, senior investment officer for Chemung Canal Trust, told Bloomberg.

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During the recent stock market drops, share prices fell faster and further than any other period early in an economic recovery since 1950. The Standard Poor s 500 Stock Index dropped 13.7 percent in the 45 day after its April 23 peak. That s enough to make some experts...
Sharp Stock Correction Inspires Talk of Bear Market
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2010-56-22
Tuesday, 22 Jun 2010 08:56 AM
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