Stocks in danger of falling through autumn lows
But after last week's plunge, stocks are much closer to falling through those lows -- which would be another blow to investor psychology.
Hammered in large part by deepening fears of a European financial meltdown and a global recession, most markets plunged in August and September. As worries eased temporarily in October, stocks rebounded, only to dive again this month as Europe's situation has worsened.
The main Spanish stock index sank 6.6% last week to end at 7,763. A further loss of 1.6% would push the index below 7,640, the 2 1/2-year closing low it reached on Sept. 12.
Falling through previous index lows wouldn’t assure a new market plunge, but it would be an obvious red flag to investors who’ve been assuming that the autumn nadirs for stock prices were the worst of it. That could make potential buyers more skittish, wondering where the real bottom is.
The battered French market, down almost 12% in November through Friday, was just 2.6% from its September low. Italian stocks ended Friday down 13% for the month and 3.3% above their September low.
U.S. stocks also are getting closer to their 2011 lows, which for most indexes were reached on Oct. 3. The Dow Jones industrial average, which fell 4.8% last week to end at 11,231.78, is 577 points, or 5.1%, from its Oct. 3 close of 10,655.30.
The broader Standard & Poor’s 500 index also is 5.1% from its October low, while the Nasdaq composite would have to lose another 4.3% to reach a new 2011 low.
A few markets already have reached new 2011 lows: Japan, India and Taiwan did so on Friday.
So too did Greece, the epicenter of Europe’s debt debacle. The Greek market now has lost 88% of its value from late 2007, and there still are few takers: The Athens market is down 18% this month alone.
-- Tom Petruno
Photo: On the New York Stock Exchange floor last week. Credit: Spencer Platt / Getty Images