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Stocks Are On Pace For Their Worst December Since The Great Depression – The Dow Is Now Down Over 3,300 Points From The Peak
U.S. stocks have not fallen this dramatically during the month of December since the Great Depression of the 1930s. On Monday, the Dow Jones Industrial Average lost another 507 points, and it is now down more than 1,000 points from Thursday’s close. This fresh downturn has pushed the Dow and the S&P 500 very firmly into correction territory, and the Russell 2000 is now officially in bear market territory. The ferocity of this stock market crash is stunning many of the experts, and many investors are beginning to panic. Back in early October, the Dow hit an all-time high of 26,951.81, but on Monday it closed at just 23,592.98. That means that the Dow has now plunged more than 3,300 points from the peak of the market, and many believe that this stock crash is just getting started.
When it was first being reported that the stock market was on pace for the worst December since the Great Depression, I have to admit that I was skeptical.
But CNBC has the numbers to back up that claim…
Two benchmark U.S. stock indexes are careening toward a historically bad December.
Both the Dow Jones Industrial Average and the S&P 500 are on pace for their worst December performance since 1931, when stocks were battered during the Great Depression. The Dow and S&P 500 are down 7.8 percent and 7.6 percent this month, respectively.
And we still have two weeks remaining in December. If things continue to unravel, we could potentially be talking about a truly historic month for Wall Street.But we certainly don’t need things to get any worse, because the damage that has already been done has been immense. The following numbers come from Zero Hedge…
Dow -12.7% from highs (correction)
S&P -13.7% from highs (correction)
Nasdaq Composite -17.3% from highs (correction)
Dow Transports -19.4% from highs (correction)
Russell 2000 -20.6% from highs (bear market)
The Russell 2000 is often an early indicator of where the rest of the market is going, and if that turns out to be the case this time around then we should expect the Dow and the S&P 500 to fall a lot farther.When asked about this market downturn by CNBC, one equity strategist actually used the “R” word…
“The sell-off comes from the risk-off sentiment. Small caps are riskier than large caps, and there are some concerns about the end of a cycle in the U.S. and that we are entering a recession,” said Tobias Levkovich, chief U.S. equity strategist at Citi.
We haven’t even had any sort of a major “trigger event”, and yet stock prices have been steadily falling for weeks.How bad could things ultimately get if there is some sort of “Lehman Brothers moment” that sets off a full-blown state of panic?
Already, many are using the term “bear market” to describe what is happening. For instance, Jeffrey Gundlach attracted a huge amount of attention when he made the following statement on Monday…
DoubleLine Capital CEO Jeffrey Gundlach said Monday that he “absolutely” believes the S&P 500 will go below the lows that the index hit early in 2018.
“I’m pretty sure this is a bear market,” Gundlach told Scott Wapner on CNBC’s Halftime Report. The major averages fell to session lows following his comments.
And some high profile stocks are already well beyond bear market territory. Goldman Sachs is now down 40 percent from the 52-week high, and the banking sector as a whole is just getting crushed.Trillions upon trillions of dollars of paper wealth has disappeared, and needless to say, hedge funds are starting to go down like dominoes. Earlier today, a New York Post article used phrases such as “losing their shirts” and “financial wipeout”…
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