Bear Threat Ended the Dismal First Half
July 1, 2008
Benchmark stock indexes around the world just finished their worst first half in six years or even more. That has left much of the world's equity markets, especially the U.S. markets, near a bear market for the first time since the dot-com bubble burst at the beginning of the decade.
Particularly the Dow Jones Industrial Average, it was its worst first half since 1970 after dropping 14.4 percent in the six months through June 30. The Dow ended 19.8 percent down from its October 2007 high, just short of a bear market, which is defined as major index decline of 20% or more from its previous closing peak during a one-year period.
Since the start of the year, stocks dropped quickly and then seemed to strike bottom in March when investment bank Bear Stearns collapsed. But an upward correction in April and May fizzled, and June 2008 ended as one of the worst Junes on record. It was the worst June performance for the Dow Jones industrial average since 1930, and the worst June for the S&P 500 ever.
For the first six months ended on June 30, the Dow Jones Industrial Average (.DJI) has dropped 14.4%, ended at 11,350.01; the Standard & Poor's 500 index (.SPX) has plunged 12.8%, ended at 1,280.00; and the Nasdaq Composite index (.IXIC) has been down 13.6%, ended at 2,292.98.
Investors have been dumping stocks on persistent concerns that a global slowdown will be exacerbated by accelerating inflation, fueled by soaring oil and food prices, and rising interest rates. A crumbling outlook for corporate profits has recently added to the gloom.