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As if the Monday after New Year’s isn’t depressing enough for workers returning to the daily grind, the markets delivered a historically rude awakening to 2016.
The Dow Jones Industrial Average fell as much as 467 points at its intraday low Monday before settling for a 276-point loss. That 1.6% dip was still bad enough for the worst opening performance for the U.S. benchmark since the unpleasantness of 2008.
As was the case with the brief market correction that occurred last August, stock market red in China bled over to Wall Street once the sun rose on the East Coast.
China’s benchmark, the Shanghai Composite Index, tumbled 6.9% on Monday due to currency concerns and the fear of a continued slowdown in the country’s steelmaking and other industrial sectors. The sell-off may also have been exacerbated by the debut of market-halting circuit breakers in the Shanghai market, which are designed to curb sell-offs but may have actually stoked the fire sale in a market unaccustomed to such measures.
On Thursday, the stateside selling was even uglier, with the Dow dropping 2.3%, the S&P 500 falling 2.4% and the Nasdaq Composite Index shedding 3%.
But before you hit the panic button and go the all cash or money market route, remember, we’re only a week into 2016. Also, recall that things looked pretty bleak during the China market chaos last August and the peak of the Greek debt crisis brouhaha in June.
While 2015 certainly wasn’t a banner year for profits, it also didn’t bankrupt index-fund investors. As far as the indexes were concerned, 2015 finished the year as follows:
- Dow Jones Industrial Average: Down 2.2%
- S&P 500: Down 0.7%
- Nasdaq Composite: Up 5.7%
My colleague Tony Daltorio isn’t concerned with the eastern winds of discontent emanating from the Chinese markets. As he detailed in Thursday’s issue of Daily Profit, he sees select opportunities in several “new economy” investments in China.
Here are some of my favorite Wyatt Investment Research articles of the week:
Top 5 Dividend Increases for January – It’s a new year and a new month, which means a new round of companies upping their payouts. Wyatt Research analyst Marshall Hargrave has done the legwork and has tracked down the five best dividend increases this month.
Small Dogs of the Dow: A Simple Strategy for 2016 – The Small Dogs of the Dow is a simple and effective strategy that has outperformed the Dow Jones Industrial Average and the S&P 500 over the last 20 years.
All That Glitters Might Be Gold – Gold investments frequently benefit during heightened geopolitical and financial uncertainty. We certainly have both these days.
After a Huge Year for M&A, What Does 2016 Have in Store? – With $3.8 trillion in deals, 2015 was a record year for mergers and acquisitions. Will 2016 offer more surprises? Wyatt Research’s Bob Ciura thinks one Big Oil company could be in line for a big acquisition.
A Tour Around the World of Emerging Markets – With all apologies to Vanguard Group founder John Bogle, indexes stink when it comes to investing in emerging markets.
Sonic Drives Through 33% Earnings Growth – Fast-food chain Sonic (NASDAQ: SONC) is known for its funny commercials and unique menu offerings. But investors may also want to associate this company with rapid growth, because that’s the key takeaway from the latest Sonic earnings report.
No Need for Income Investors to Worry in 2016 … Or Beyond – An investor, in Steve Mauzy’s lexicon, focuses on the concrete – cash flow. Specifically, cash that flows to him.
3 Beaten-Down Stocks Set to Turn the Page in 2016 – After a lackluster 2015, it’s hard to view many of the S&P 500’s beaten-down stocks with much optimism – with a few notable exceptions.
Have a great weekend!