BL: U.S. Stock Slump Fits With Bull-Market Pattern: Chart of Day
By David Wilson
Feb. 23 (Bloomberg) -- U.S. stocks are falling into “a recurring pattern” of volatility this year as the economy’s rebound gains momentum, according to Jeffrey Kleintop, chief market strategist at LPL Financial.
“The environment may be more like that of 1994 and 2004, the last two times the economy transitioned from recovery to sustainable growth,” Kleintop wrote yesterday in a report.
The CHART OF THE DAY shows how the Standard & Poor’s 500 Index’s performance since the beginning of last year compares with its movement during 2003 and 2004. The report featured a similar chart.
Between Jan. 19 and Feb. 8, the S&P 500 lost 8.1 percent. The magnitude of the decline was in line with its setbacks six years earlier, depicted in the chart. The index slid 5 percent to 10 percent three times during 2004, as it did in 1994, even though a bull market was in progress.
Investors seeking to profit from any swings this year will need to adjust their holdings more than usual and focus on yields as well as prices, Kleintop wrote.
The potential volatility also will favor so-called active managers, rather than those who track indexes, the report said. Investors who make their own securities selections can capitalize on “opportunistic-style investments” as markets move, he wrote.
(To save a copy of the chart, click here.)
To contact the reporter on this story: David Wilson in New York at dwilson@bloomberg.net
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