STOCKS DIVE, BUT ‘THIS IS NOT 2008’
Experts say early Wall Street crisis a ‘big correction’
The U.S. stock market has gotten hammered in 2016, the latest blow coming Thursday when the Dow Jones industrial average plunged 392 points as part of a global stock rout triggered when China halted trading in its market after a 7% plunge.
It is Wall Street’s worst 4-day start to a new year ever and has jittery investors flashing back to the dark days of the financial crisis.
But most Wall Street pros insist this is not the first act in a sequel to the panic of 2008, though they say it could equal or exceed the stock market’s first “correction” in four years back in August when stocks dropped 12.4%.
“This is not 2008,” says Brian Belski, chief investment strategist at BMO Capital Markets. He says this is more akin to the sell-off in August.
The general consensus, based on a dozen top market strategists USA TODAY contacted, is that the latest market mayhem — sparked by massive declines and trading halts in China’s stock market and growing fears that a more serious slowdown in the world’s second-biggest economy will dent global growth — won’t morph into anything like 2008 when the stock market lost more than half of its value.
“Big correction,” is the way David Kotok, chief investment officer at Cumberland Advisors, describes the latest market stumble.
“My guess is this is an ongoing correction to readjust the U.S. stock market’s valuation rather than a bear market,” says James
Paulsen, chief investment strategist at Wells Capital Management.
“Most of the world economy, and particularly the U.S., is in solid financial shape,” he says. “I don’t think the China economy is that bad.”
U.S. investors are heading to the sidelines because they are getting hit with a lot of negatives at once, including China, North Korea’s claim that it tested a hydrogen bomb, tension between Iran and Saudi Arabia and weak oil prices, says Bill Hornbarger, chief investment strategist at Moneta Group.
“It doesn’t appear to be the start of a bear market yet,” he says. “Remember in 2008, the markets just quit functioning. This has been relatively orderly and liquidity has been available to handle the selling.”