2016 World Stock Market Slide – What Happened Jan. 4-8?

2016 stock market slide

The 2016 stock market slide during the week of Jan. 4-8 affected markets and investors around the world. While it started in China, it quickly spread throughout markets in Asia, Europe and the United States. skeeze / Pixabay

By the end of the first week of trading, thousands of brokers and analysts around the world were in shock as a result of the unexpected 2016 stock market slide.  The bottom line is that it was the worst first week of trading for any year on record.  The best way to see how bad it was is to look at the numbers.

2016 World Stock Market Slide – The Numbers

Here is a comparison of the numbers at the close of trading on December 31, 2015 and those at the close of trading on January 8, 2016.

Dow Jones:  17,425.03 – 16,346.45 = 1,078.58 point loss (-6.18%)

S&P 500:  2,043.94 – 1,922.03 = 121.91 point loss (-5.96%)

Nasdaq:  5,007.41 – 4,643.63 = 363.78 point loss (-7.26%)

This means that the average drop in the stock market during the first week of 2016 was -6.4 percent.

Week in Review for the 2016 World Stock Market Slide – Jan. 4 to 8

A number of issues contributed to the losses during the week of January 4 – 8, 2016.  Below are some of the more serious concerns for investors:

  • On Monday, China’s markets triggered their circuit breakers for the first time ever when their markets tumbled 7 percent.  Officials closed their stock market for the rest of the day.  The remainder of the week the market was volatile, as you will see below.  Over the next few days, stock markets dropped around the world, including in the United States.
  • On Tuesday, U.S. auto companies reported that they had strong sales during the month of December.  Unfortunately, their sales were not as good as had been projected.  However, everyone breathed a sigh of relief when the markets in both China and the United States seemed to stabilize.
  • On Wednesday, North Korea announced that they had tested a hydrogen bomb, generating fear around the world. Oil prices dropped below $35 a share for the first time since 2004.  There was more bad news in the U.S.  Apple stock dropped below $100 a share, manufacturing orders were down in November, Twitter stock closed at its lowest price ever, and Macy’s announced it was closing more stores.  The stock market slid again.
  • On Thursday, for the second time this week, China’s stock market circuit breakers were triggered once again.  This time, they closed their stock market for the day after only 30 minutes of trading. Oil prices remained at their lowest level in 11 years.  Once again, the ripple effect was felt around the world.
  • On Friday, China gave up on their circuit breakers, believing they were causing sellers to panic. Americans woke up to positive employment news. Approximately 292,000 jobs were created and unemployment remained at 5 percent.  Toys R Us reported an increase in holiday sales.  However, even this positive information was not good enough to keep our markets from declining steeply once again.  Oil prices dropped to $33.16 a barrel.  By the end of the week, the Dow had dropped 1079 points, the S&P 500 had lost 122 points and the Nasdaq had plummeted 364 points.  Overall losses were approximately -6.4 percent in just one week of trading … the worst first week of a year, ever.

Stock market slides tend to have patterns.  Below are the phases that investors should expect:

Recap of the 2016 World Stock Market Slide

The contraction in China’s manufacturing industry and falling oil prices have combined to cause volatility and nervousness in stock markets around the world.

There is a stock market adage that most long-term investors know … “So goes January, so goes the year.”  This has actually been shown to be true 70 percent of the time over the past 100 years.  Many investors are concerned that because of all the international turmoil and bad economic news, it could become true this year, as well … not just in the U.S., but in markets around the world.

On the other hand, some investors believe that a correction of this size can also provide opportunities for bargain hunters and long term investors:

Sources:

yahoo.com/finance

breakingnews.com

CNN and ABC news reports during the week of Jan. 4-8, 2016


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