S&P 500 and Stock Markets Worldwide Close Out Worst Year Since 2008

Stock markets worldwide, including Dow Jones, Nasdaq and the S&P 500, have posted disappointing yearly returns, with many indexes being compared to their performance during the financial crisis.

The S&P 500 is down 6.2% for 2018, while the DOW Jones Industrial Average is down 5.6% for 2018. These numbers, compared to the financial crisis, where the indexes posted yearly losses of 38.5% and 33.8% are a new low given the general bull sentiment surrounding markets going into 2018.

While the S&P 500 was up 9% during the first three quarters of 2018, it has marked a new milestone of ending the year in the negative digits at -6.2%. This is the first time the S&P closed negative digits on the yearly after rising for the first three quarters. Similarly, the NASDAQ composite fell 3.9% for 2018.

The main catalyst for this drop is said to be the sell-off that began in October.

There have been widespread concerns of an economic slowdown, along with fears that the Fed is making incorrect decisions with respect to monetary policy.

S&P 500 Down Year Over Year

The S&P 500 was on a great run throughout 2017, opening at around 2240 points and ending the year at 2674 points.

S&P 500 2017 performance

However, 2018 brought with it a lot of volatility, sharp trend reversals along with increased political tensions.

The trade war between US and China has resulted in fluctuating stock markets throughout 2018. However, recent developments indicate that the disputes might soon be resolved, as early as March 2019. This might be a good fundamental catalyst for markets worldwide. A trade agreement being chalked out might come into effect in March 2019.

S&P 500 2018 Performance

Markets in London experienced a similar downturn, with the FTSE 100 index posting a yearly drawdown of 12%. This contrast to the record high of 7859 points that the Index posted earlier this May.

There are several reasons the FTSE dropped severely during 2019. To begin with, trade tensions between US and China have affected stock markets globally. Secondly, the uncertainty surrounding Brexit and concerns regarding US interest rates provoked a selloff within markets in UK.


Chinese stock markets took the worst hit, with the CSI 300 benchmark dropping nearly 27% at market close on December 27th. The primary cause for this drop is said to be the ongoing trade dispute with the Unites States.

Hong Kong’s HSI Index lost 13.6% this year, its worst since 2011 when it lost 19.97%

Similarly, Japan’s Nikkei 225 Index lost 12.1% during 2018, its worst since the financial crisis.

Author: Alex T
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Tech stocks are diving, and traders have never been more scared of a massive meltdown

  • Tech stocks sold off broadly on Monday, dragging major US indexes lower, especially the Nasdaq 100, which lost as much as 1.5%.
  • Amid the selling, investors are paying the most ever for Nasdaq 100 downside protection on a one-month basis, relative to bets on further increases in the index.
  • That could end up being a saving grace for tech should pressures continue to mount. By comparison, hedges were nowhere near as elevated during the dotcom bubble.

Fresh off a rough week as the worst-performing group in the S&P 500, tech stocks are still feeling the pain.

The tech-heavy Nasdaq 100 index dropped as much as 1.5% on Monday, compared to a relatively tame 0.5% loss in the benchmark S&P 500.

Much of the selling pressure stemmed from weakness in the components of the so-called FAANG group — consisting of Facebook, Amazon, Apple, Netflix, and Google. Those companies hold large weightings in major equity indexes, and exercise outsized influence on the broader market.

The group has faltered since Facebook’s disastrous second-quarter earnings report last week, which saw the social media titan forecast a growth slowdown, stoking investor fears that a similar situation could afflict other tech firms.

Also likely weighing on investor sentiment are reports that Democratic senator Mark Warner is charging ahead with proposals that would result in more tech regulation. Further, in a note to clients on Monday morning, Morgan Stanley chief US equity strategist Mike Wilson said the tech sector is showing signs of “exhaustion.”

Based on one gauge of market anxiety, investors are historically spooked. A measure called skew, or the premium options traders are paying to protect against a loss in the PowerShares QQQ Trust ETF over the next month, relative to wagers on an increase, has spiked to its highest level on record. (Note: QQQ is designed to track the Nasdaq 100.)

In other words, investors have never been more defensively positioned for a possible tech meltdown.

QQQ 1 month skewBusiness Insider / Joe Ciolli, data from Bloomberg

This nervousness may actually turn out to be a saving grace for the market, however, since the surge in hedging costs shows investors are braced for the worst. After all, one-month skew was never this elevated — even at the height of the tech bubble, when downside protection was needed most. Theoretically, this type of preemptive behavior could help stem a possible selloff.

For further evidence of tech’s importance to overall market strength, look no further than the impact it’s had on the S&P 500’s return this year. The index’s top 10 contributors have accounted for 62% of the benchmark’s 7% year-to-date return, according to Goldman Sachs data. Of those 10 companies, nine are in the tech sector.

Until tech’s iron-clad grasp on US stock indexes loosens, expect deep swaths of selling — such as the one seen on Monday — to continue roiling markets. But at the same time, find comfort in the fact that so much hedging is going on, and perhaps consider doing it yourself.

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