After the markets’ worst week since 2008, Wall Street takes a deep breath and braces for Monday
Today was another bad one for markets and tallied up the worst week to hit equities since 2008 and the kickoff to the Great Recession. And at this point, traders and investors are looking forward to a weekend break to steel themselves for Monday.
“I was a young broker with PaineWebber back in October of 1987,” noted registered investment advisor Stephen Akin. “There are a number of similarities in the market over the past few months. Yes, the weekend will be a wonderful respite.”
Most of the indexes were down: S&P 500 (24.52, -0.8%), Dow Jones Industrials (356.88, -1.4%), and Russell 2000 (21.44, -1.4%). The bright spot, using the term loosely, was the Nasdaq, which ended flat.
Over the last week there have been cumulative drops of 11.5% for the S&P, 12.4% for the Dow, Nasdaq’s 10.5%, and 12% on the Russell 2000. That’s the kind of experience for investors and people in finance where it’s hard to do anything other than wait for it to be over.
Doug Butler, a senior vice president at Rockland Trust and director of research services for its investment management group, called it “one of the most punishing weeks in the market” he had experienced. Thinking back to 2008 to 2009, he did think these types of events develop a similar rhythm: “Calamity, Worst Case Scenario Projections, Panic Induced Market Decline, Passage of Time and Resolution of Uncertainty, and, finally, Market Recovery.”
Like the five stages of market grief.
A number of stock investment sites faced customer access issues. A Vanguard spokesperson wrote that some of its clients “experienced intermittent website unavailability for a period this morning.” The company also saw an increase in trading this week: “Approximately 1% of U.S. Vanguard households traded on Monday and Tuesday; a typical day is 0.4%,” the spokesperson noted. The majority were net buyers of stocks, particularly index funds, which Vanguard took as people seeing the drop as a buying opportunity.
Fidelity Investments noted that customers “experienced intermittent issues when accessing their accounts online this past week,” the result of system issues. That could point to an underlying problem or a system reaction to handling more traffic than it was designed to.
And TD Ameritrade sent the following in a statement: “While client access was not impacted, we did experience some slowness in the reporting of trade confirmations this morning related to heavy trade volumes. The issue has been resolved.”
As far as what the weekend, and week after, will bring, there’s some hope, but little certainty. “I look forward to seeing the market bottoming next week,” Stoyan Panayotov, founder of Babylon Wealth Management, said in a note to Fortune. “Even though indices have fallen again today, we are seeing signs of buyers coming back to the market and buying selectively.”
Specifically, Panayotov noted shares of some cruise, travel, and energy companies—all of which have been hit hard by COVID-19—were trading higher today. “Even Microsoft is moderately high,” he said. “To me, this is a sign that investors are looking for a bottom.”
Others thought it was too soon to assume that fear, and further losses, have passed. “Mere weeks ago, many on Wall Street opined that the market would not feel the effects of COVID-19,” observed Sarah Bauder, a senior market analyst at SophisticatedInvestor.com. “However, given the turmoil of this week, that sentiment was erroneous, to say the least.”
Retail investors often rekindle their worries over weekends when not so distracted by work and life. “We not only have the potential for weekend panic but month-end panic,” according to Charles Self, chief investment officer at iSectors. “Many retail investors either receive paper statements or email notifications. When they see how much money they lost in a month, there could be another panic out of stocks.”
Then there’s the ongoing election process. Concern over a Democratic candidate and his or her relationship to Wall Street might cause additional anxiety. “This weekend offers little to no hope that we will be closer to turning the corner on all the uncertainty,” wrote Jason R. Escamilla, CEO of ImpactAdvisor. “Best to keep praying through Super Tuesday.”
Until the start of the week, then, what’s the best course of action? Huddle down in a financial fallout bunker?
“In essence, yes,” Bauder joked. “Stock up on the ol’ non-perishables.”
And maybe shares of the companies that sell them.
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