Sour holiday season on Wall Street as investors fear slowdown
The holiday season is supposed to be cheerful, but right now it’s tough to find a lot of optimism in the stock market.
Down 3.8 percent over 3½ days, the S&P 500 posted the thirdworst Thanksgiving week since 1939, when President Franklin D. Roosevelt moved the celebration.
The souring mood contrasts with the buoyancy among consumers, whose online shopping over Thanksgiving is forecast to reach a record this year. What’s bothering investors is a prevailing fear that things are as good as they can be. From corporate earnings to the economy, a slowdown looks likely after one of the longest expansions on record.
Investors have sought safety in companies that offer stable income and high dividends since the S&P 500 started a retreat last month that morphed into its second 10 percent correction of the year. JPMorgan strategists led by Dubravko Lakos-Bujas said this suggests the market is, perhaps wrongly, “starting to price in a recession-like scenario.”
“We view the current style dislocation as overdone and inconsistent with the fundamental backdrop,” the strategists wrote in a note earlier this week. “The business cycle slowdown concerns are largely premature.”
While losses in stocks aren’t all that big to date, they’re still poised to make it the worst year since the bull market started in 2009. Down more than 1 percent, the S&P 500 is left with only five weeks to break even for the year.
The market has shown a mixed track record after a lousy start to the holiday season. When the S&P 500 last had a worse Thanksgiving week, in 2011, the index rallied 8.5 percent through year-end. In 1973, a similarly bad start led to further declines, with the S&P 500 losing an additional 1.9 percent before the year was over.