An increasing number of investment gurus have told USAToday that a bear market has already hit Wall Street after a quarterly slump that wiped almost $11 trillion off the value of global shares.
After a 2.6% drop Monday to 1881.77, the broad Standard & Poor's 500 stock index was down 11.7% from its May 21 record close of 2130.82 and on track for its worst quarter since the third-quarter of 2011.
The double-digit percentage drop equates to an official correction, defined as a drop of more than 10% from a high.
But the current downdraft, at least from a numerical standpoint, is still a far cry from a full-fledged bear market, or a drop of 20% or more from a peak, USAToday reported.
Jim Cramer, the ex-hedge fund manager and CNBC host, warns that he doesn't like the current market conditions. "We have a first-class bear market going," he recently said.
Gary Kaltbaum, president of Kaltbaum Capital Management, warns that the poor price action of the stock market and hard-hit sectors, such as energy and biotechs, has all the earmarks of a bear market. Kaltbaum said: "We remain in a worldwide bear market for stocks."
The discussion about bear markets has been a favorite topic of the financial press, USAToday observed. In August, roughly 1,400 news stories published by Bloomberg included the term "bear market," up seven-fold from about 200 mentions back in May at the market's recent peak, according to BMO Capital Markets.
Mixed messages on Federal Reserve rate policy combined with worries of a China slowdown have put the benchmark on track for its worst quarter since 2011 while creating the most turbulent period for stocks in years, Bloomberg reported.
Market uncertainty is “exaggerating the directional shifts,” said Anthony Peters, a broker at Swiss Investment Corp. in London.
“Nobody knows what’s going on, therefore when it’s going up, everybody’s buying, and when it’s going down, everybody is selling. What we’re looking at is a technical correction, the market has fallen a long way," he told Bloomberg News.
But others see a brighter future for US stocks.
Stock-market guru Jeremy Siegel, professor of finance at the University of Pennsylvania, continues to be bullish about the stock market’s future, despite a quarterly slump that wiped almost $11 trillion off the value of global shares.
Despite all the market volatility and rate-hike uncertainty, the Wharton School finance professor told CNBC
that the Dow Jones Industrial average will hit 20,000 next year.
"I definitely think we will see Dow 20,000 in 2016," he said. The Dow Jones industrial average rose 47 points, or 0.3 percent, to close at 16,049 Tuesday. It plunged 312 points the day before.
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