The CHART OF THE DAY shows the number of times that the Standard & Poor’s 500 Index declined 5 percent or more during each year between 1960 and 2013, according to data compiled by Deutsche Bank. In 22 of the 54 years, only one retreat crossed the threshold. Another 22 had two losses of that size.

This year, the S&P 500 closed at a record on Jan. 15 and then dropped 5.8 percent through Feb. 3. The size of the loss approached an average of 7 percent for the index’s dips since 1957, which Bianco cited in a Feb. 7 report.

Losses like the latest one “usually stay under 10 percent and are quick,” the New York-based strategist wrote. The S&P 500 reached its low in 12 trading days, less than half the average of 28 days since 1957.

Bianco wrote that he’s unsure which way stocks will go in the next 5 percent-plus swing, although he added that higher oil prices are encouraging. Crude settled at more than $100 a barrel yesterday for the first time this year in New York trading after rising 9 percent from a low set last month.

“We wait for more information” before turning bullish, he wrote, citing data that showed weakness in U.S. employment and manufacturing. During January, fewer jobs were added than economists in a Bloomberg survey predicted. A manufacturing index from the Institute for Supply Management matched its biggest one-month drop in the economy’s current expansion.

Category: Markets

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2 Responses to “Number of 5%+ Declines in S&P 500”

  1. Expat says:

    Basically, Bianco has no clue what this all means. He is not alone. But it’s a lovely chart, ready to be interpreted however you want. And will the market rally? Of course.

    There is an inherent bullish bias to the stock market. First, there is a underlying inflationary policy worldwide. Stock markets need to go up three to ten percent a year just to tread water. Second, it is a selection of winners. Losers are dropped from the reckoning. It’s as if we measured the stats of National league batters based on the batting averages of the players in the All Star game.

    And finally, while the stock market concerns us here (a rare, select few I might add), it does not concern 99% of the world’s population and does not matter to or reflect the real economy.

    I am reminded of the detective from The Thomas Crown Affair (remake) commenting on the eponymous art thief: “If some Houdini wants to snatch a couple of swirls of paint that are really only important to some very silly rich people, I don’t really give a damn.”

    And so for the market and its ups and downs.

    Thus endeth the rant…but it’s been a while since I commented on anything.

  2. intlacct says:

    Great post, Expat.