 Does Dow's bearish descent mean we all get sore head?
(China Daily)
Updated: 2008-07-04 07:45 The Dow Jones Industrial Average's 21 percent retreat from a record may foreshadow more losses for the 112-year-old stock gauge, based on its performance in previous bear markets. "I don't expect this to be the end," said Dean Gulis, part of a group that manages about $3 billion in Bloomfield Hills, Michigan, for Loomis Sayles & Co. "Stocks have been trending down now for basically a year. They're going to keep struggling for a while."
The Dow slipped into a bear market on Wednesday (local time) for the 12th time since 1962, according to Westport, Connecticut-based research firm Birinyi Associates Inc. Prior declines averaged 29 percent and lasted 322 days, Birinyi data show. The biggest was a 45 percent drop over 694 days starting in January 1973. The longest profit slump in six years and the first nationwide decrease in home prices since the Great Depression pushed US equities to a nine-month tumble. Growth in gross domestic product is forecast to slow to 1.4 percent over the next 12 months from 2.2 percent while inflation quickens, according to data compiled by Bloomberg. The Dow slipped to 11,215.51, led by General Motors Corp. and Alcoa Inc. The 30-stock gauge closed at a high of 14,164.53 on Oct 9. Its drop outpaced the 19.4 percent slump in the Standard & Poor's 500 Index, which is within 10 points of a bear market. Profits at S&P 500 companies decreased 10.5 percent during the second quarter, according to a Bloomberg survey of analysts compiled on June 27. Earnings at financial firms and consumer companies reliant on Americans' discretionary income slumped 56.5 percent and 19.9 percent, respectively. The Dow includes five financial firms: New York-based AIG, American Express Co, Citigroup and JPMorgan Chase & Co and Charlotte, North Carolina-based Bank of America. Agencies (China Daily 07/04/2008 page16) |
