The Standard & Poor’s 500 index dropped into bear-market territory last week, joining the two other major stock indexes in falling 20 percent from recent peaks. But maybe that’s not a bad thing, according to S&P strategist Sam Stovall.
Historically, crossing the 20 percent barrier means the market is about two- thirds of the way through the total decline from its high. The index has also performed strongly in the 12 months after it crossed the 20-percent bear threshold, rising in seven of the nine prior periods.
Bear Duration 1- yr market (months) change* 1956-57 15 31.0% 1961-62 7 26.1% 1966 8 24.6% 1968-70 18 11.8% 1973-74 21 -26.9% 1980-82 21 30.4% 1987 3 23.2% 1990 3 29.1% 2000-02 31 -1.2% Average 14 16.5%
* after index crosses 20 percent threshold Source: Standard & Poor’s
Seeing a bull.
Stocks have been pummeled this year, but Wall Street analysts are getting more optimistic. Nearly half of all analyst ratings for stocks in the Standard & Poor’s 500 — 49 percent — are “buys,” according to Citi Investment Research.
That’s up from about 48 percent at the beginning of 2008 and 46 percent the year earlier. The last time more than 50 percent of ratings were “buy” was in the summer of 2006. Unsurprisingly, the hot energy sector is among analysts’ favorites. Four stocks were universally liked, with “buy” ratings from all analysts covering them as of the end of June: Snap- On (SNA), Staples (SPLS), Lorillard (LO) and Thermo Fisher Scientific (TMO).
Prize inflation.
Winning the singles tennis title at the U.S. Open will net the champion at least $1.5 million this year, a 7 percent rise over last year. That’s a more generous raise than most Americans are receiving. Americans saw personal income grow 4.5 percent in the first quarter of 2008 compared with the year-ago period.
Other prizes haven’t gotten big boosts. The 2008 Nobel award comes with a prize of 10 million Swedish kronor, worth nearly $1.7 million, the same sum as in 2001.
Likewise, the MacArthur fellowship, often known as the “genius grant,” totaling $500,000, hasn’t increased since 2001. Winners from 2007 include a blues musician, a medieval historian and a water-quality engineer.
