An army of pundits has mobilized, and they’re all predicting what’s ahead and assigning blame.
Nothing gets them talking like a Dow dive of 1,841 points (or 7%) over two sessions.
“Some people are selling because it’s a growth scare and higher wages/interest rates might take a chunk out corporate profits,” says Josh “The Reformed Broker” Brown.
Others are bailing on stocks because they see a “constitutional crisis” in the wake of the Nunes memo, or because they’re algos that sell when others sell, Brown writes at his blog. The Ritholtz Wealth Management CEO also says his trick for coping with a correction is setting up some “absurd” buy orders.
What about forecasts?
“The past couple of days are only the beginning of what could be still a substantive bear market in stocks,” says veteran market pundit Dennis Gartman for our call of the day.
“It’s been nine years of a bull market. Can we give back 12%, 15%, 17% over the course of the next several months?” the editor of The Gartman Letter asks in a Bloomberg TV interview.
“I’d be somewhat surprised if we didn’t do that.”
One key thing about Gartman is that many traders view him as a contrarian indicator, pointing to infamous misfires such as his prediction that oil wouldn’t regain $44 a barrel in his lifetime.
Key market gauges
Futures for the Dow
, S&P 500
have been unusually choppy. Those for the blue-chip gauge have been switching from triple-digit losses to triple-digit gains, trading in a 1,000-point range.
Asian markets closed sharply lower, with the Nikkei
shedding 5%, and the Stoxx Europe 600
is down about 2%. Bitcoin
has been getting whacked as well and has changed hands under the $6,000 mark.
See the Market Snapshot column for the latest action.
90% — The VelocityShares Daily Inverse VIX Short Term ETN
has been down by that much in extended trading. It’s a fund for betting that markets will stay calm, so it’s unraveled along with a rival product from ProShares
CNBC’s Jim Cramer is blaming “shorting the VIX” trade for driving the market slump …
understand that we cannot make up stuff about why the market is down. It is very 87 like– a product, shorting the VIX is causing most of this. But people will not understand it. Watch us, we do !
— Jim Cramer (@jimcramer) February 6, 2018
… while StockTwits co-founder Howard Lindzon says “I am an idiot” after dabbling in XIV, as the fund’s sponsor now could liquidate the product.
As markets tumbled yesterday, the websites and mobile apps for discount brokers, mutual-fund companies and robo-advisers suffered outages and slowdowns.
Did Trump say in 2015 that the president should be shot out of a cannon if the ‘Dow Joans’ tanks? No, says Snopes. But nattering nabobs are pointing out the tweeter-in-chief may be regretting that he’s associated himself so closely with this market.
are on the earnings docket before the open, while Disney
report after the closing bell.
And read: Chipotle’s brand is still ailing
On the economic front, readings on U.S. trade and job openings are on tap, along with a speech from the St. Louis Fed’s James Bullard.
Check out: MarketWatch’s Economic Calendar
Chart watchers keep offering up predictions on where the stock drop could attract bargain hunters, after the S&P 500 traded as low as 2,638 yesterday.
“While I did not think we would get down to the 2,600 area, a failure there would bring the 200-day average in as the next buy point near 2,534,” writes Mark Arbeter, a technical analyst and president of Arbeter Investments.
His above chart shows the 200-day moving average in red.
Read Mark Hulbert on: Some good news for investors in the stock market’s plunge
“Everyone wants a fancy-sounding story for why the stock market goes down, but in most cases it’s as simple as ‘because it went up a lot.’” — Pragmatic Capitalism’s Cullen Roche offers a not-so-fancy reason for the selling.
RIP to John Mahoney, who played the cantankerous dad on “Frasier.”
This woman refuses to reveal herself to get her $560 million Powerball jackpot.
Ancient spiders had a tail.
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