Welcome to Boxing Day — a gift-giving holiday celebrated mostly in the British Commonwealth, where markets in Great Britain, Australia and elsewhere are closed for the day. We might be otherwise tempted to associate this with the other sort of “boxing,” especially in light of Christmas Eve’s trading: that fight would have been stopped had it not been for a mere half-day of trading that sent the Dow down an additional 2.9%, the Nasdaq -2.2% and the S&P 500 -2.7%.
This, of course, followed three previous harrowingly down trading days as well; even with the current slight bounce in today’s pre-market, we are on pace to see the worst December in modern U.S. stock market history. The S&P 500 now joins the Nasdaq in bear-market territory (-20% from highs) with the Dow not far behind, and without much — if any — changes in sight from the issues that brought us here in the first place: a Fed rate hike, global market slowing and turmoil in the nation’s capital.
Oil prices are slightly in the green this morning, but after a 40% hit on the benchmark WTI to around $43, with the Brent around $50 — this just since the beginning of October — energy prices and the stocks that earn from them have led the bearish down-trend. We only have to go back a couple short years to see the last time low oil prices (falling all the way to the $20s) had a profoundly negative affect on the overall market. This is another sector that does not look to have any near-term turnaround on its horizon, thus may remain an albatross for the near-term market.
Housing prices from October from the ever-reliable Case-Shiller report this morning shows steady gains month over month, at 5.5%. This matches the September housing price growth. Although this data is in the rearview mirror compared to some metrics followed closely by economists and investors, it is among the most solid and least likely to be revised over time. Las Vegas was the top-performer on the 20-city chart, with prices up 12.8% year over year. Second place was San Francisco at 7.9% — a significant drop from the top spot.
The question now is whether the valuations of stocks have become attractive enough to spark a mid-week rally following the big sell-off. Being the final full week of 2018, we don’t see lots of volume trading boosting us out of this December to forget.