We're keeping a live look on the volatile markets. Here's the latest from Barron's reporters...
10:28 a.m. This is what you want to see. Yes, the market was selling off this morning, and it could have turned into another rout. Instead, stocks have bounced off their worst levels, though they are still down. The S&P 500 has fallen 0.3% to 2649.03, while the Dow Jones Industrial Average has declined 80 points, or 0.3%, to 24,521.27. The Nasdaq Composite has dipped 0.1% to 6978.07.
Its been eight days since the S&P 500 tumbled 2.1% on Feb. 2, bringing an end to the low-volatility environment that had characterized the previous year and change. And if the the S&P 500 remains around here, it would only the second time during the past eight days that the move has been less than 1 percentage point. The S&P 500 fell 0.5% on Feb. 7.
A rest day shouldn't come as a surprise given the recent volatility, and the changes of which it is a symptom. Glusking Sheff's David Rosenberg puts it plainly: "The macroeconomic fundamentals may be sound, with the best synchronized global expansion in over a decade," he writes. "But with that comes a different and higher interest rate environment." And that resulted in a surge in volatility. That's not unusual, however, as periods of solid growth have often come with higher volatility Rosenberg explains, citing 1987, 1994 and 1998 as examples.
So enjoy the rest, because there's almost certainly more swings to come.
8:26 a.m. Did we say 100-plus point drop? The markets have bounced back a bit in pre-open trading. S&P 500 futures have fallen 0.3%, while Dow Jones Industrial Average futures have dropped 94 points, or 0.4%. Nasdaq Composite futures have declined 0.3%.
6:56 a.m. Stocks look set for a weaker open this morning following two days of big gains.
Dow Jones Industrial Average futures point to a 158.27 point, or 0.6%, drop at 6:56 a.m. this morning, while the S&P 500 should fall 0.6%. The Nasdaq Composit e appears set for a 0.6% decline.
Six months ago, a 160 point drop at the open might have felt like a big cause for concern. But coming off a large two-day rally and with two 1,000 point drops and a correction in the rear-view mirror, today's decline should probably be seen as an opportunity to see how the market responds to a little diversity. As long as it doesn't snowball into something bigger, we can probably shrug it off.
That's especially true as earnings continue to get reported. Yardeni Research's Ed Yardeni notes that both during the stock market's rally in January and its selloff this month, estimates for corporate profits have continued to climb as analysts up their targets thanks to tax cuts. "The recent divergence between soaring earnings estimates for the S&P 500/400/600 and their plummeting stock price indexes has been remarkable," Yardeni says.
Will it continue to be? - Ben Levisohn