The S&P 500 made its closest brush with a new bear market yet, falling more than 20% from its all-time highs during Friday’s intraday action before reversing course and actually finishing with a marginal advance.
Specifically, the 500-company index dropped as low as 3,810 – well below the 3,837 level that would mark a 20% drawdown from its Monday, Jan. 3, record highs and put it in an official bear market – but rebounded late in the session to eke out a gain of less than a point, to 3,901.
Among the stocks weighing on the market Friday was Tesla (TSLA, -6.4%), which sank to its lowest level since August 2021 following a Business Insider report claiming that CEO Elon Musk’s privately held SpaceX “paid a flight attendant $250,000 to settle a sexual misconduct claim against Musk in 2018.” Musk decried the article as “political,” but it nonetheless acted as the cap on a difficult week for Tesla, which was just kicked out of the S&P 500’s ESG index and is facing COVID lockdown headaches at its operations in China.
Meanwhile, Deere (DE, -14.1%) was clobbered despite topping both sales and earnings forecasts and raising its full-year profit outlook. The major criticism of its report? The farm-equipment manufacturer’s sales outlook relies on having a strong second half of 2022, which isn’t a certainty.
The Dow, like the S&P 500, closed with a marginal gain to 31,261. The Nasdaq declined 0.3% to 11,354 but finished well off its intraday lows.
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Dan Wantrobski – the technical strategist and associate director of research at Janney Montgomery Scott who said earlier this week that he was “encouraged” by Wednesday’s washout – notes that while this drawdown might have lower to go, longer-term investors can begin sharpening their knives.
“At 3,800, we do believe that the S&P 500 resides in a price range (3,600-4,000) that can lead to some attractive returns over the coming years,” he says.” He’s not calling a bottom for short-term traders, but “investors who hold a long-term view can start to deploy sideline cash in small increments and build long positions for the intermediate- to longer-term timeframe.”
Other news in the stock market today:
- The small-cap Russell 2000 declined 0.2% to 1,773.
- U.S. crude oil futures gained 0.4% to settle at $110.28 per barrel.
- Gold futures ended the day unchanged at $1,842.10 an ounce.
- Bitcoin put together a small afternoon …….