January 2016 Stock Market Bear Market – The Numbers

January 2016 stock market

The January 2016 stock market experienced a serious correction. Investors were worried about a number of different issues. ClkerFreeVectorImages / Pixabay

One month into the new year, most analysts believe that the January 2016 stock market has been in an official correction, which means that most valuations ended the month 10 percent or more below their recent highs from last year.

January 2016 Stock Market Correction – First Three Weeks of Year

Dow Jones Industrial Averages:

End of 2015:  17,425.03      Jan. 31, 2016: 16,466.30   (-5.5 percent since Jan. 1)

52 Week High:  18,351.40  (now -10.3 percent below its 52 week high)

S & P 500:

End of 2015:   2,043.94      Jan. 31, 2016:  1,940.24    (-5.1 percent since Jan. 1)

52 Week High:  2,134.72  (now -9.1 percent below its 52 week high)

NASDAQ:

End of 2015:  5,007.41     Jan 31, 2016: 4,613.95    (-7.9 percent per CNN) since Jan. 1)

52 Week High:  5,231.94  (now -11.8 percent below its 52 week high)

The Chart Below shows that other major indices were also down for the month of January.

Summary of the January 2016 Stock Market

Despite the nearly 2.5 percent rise in equity prices on the last day of January, 2016, both the Dow and the Nasdaq remained in official correction territory.  The S&P 500 pulled itself out of an official correction, but it wouldn’t take much for it to settle lower again.

There were two reasons for the dramatic rise on the last day of the month:

  •  Oil prices rose to $33.62 a barrel as a result of rumors that Russia and OPEC were willing to cut their production levels in order to bolster energy prices.  However, late in the day, it was reported that Iran and Iraq were balking at the idea of cutting production.  In fact, they would actually like to increase their production levels.  As a result, the hope that oil may have hit its bottom could have been premature.
  • On the last day of January, the Bank of Japan surprised investors and analysts around the world by setting a negative benchmark interest rate in order to provide stimulus to their economy.  This also contributed to the climbing equity prices.

Causes of the January 2016 Stock Market Correction

Despite the higher share prices on the last day of January, there were several major problems that contributed to the overall slide in prices during January, 2016.

  • A number of major corporations had disappointing fourth quarter earnings.
  • Oil prices fell below $30 and remained there for a good part of the month, until the last few days when rumors caused the price to rise.  If the rumors prove to be untrue, the price of oil could drop again in February and, along with it, the price of stocks.
  • Emerging markets, led by China, now make up half of the global economy and China, in particular, is experiencing a slowdown in manufacturing.  Third World debt is also weighing down some sectors of the emerging markets.

The U.S. economy has also had slow growth, and that was a drag on the markets, too.

 

Sources:

Market prices provided by http://finance.yahoo.com

http://www.bls.gov/schedule/news_release/201512_sched.htm

http://www.breakingnews.com/ (1/25/16)


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