How Could Stock Markets Croak Like This First Thing in 2016?
by Wolf Richter
WolfStreet.com
January 9, 2016
A lot of air underneath Friday’s close.
Wall Street soothsayers were salivating Friday morning. The employment report for December tickled them. For days, they’d pronounced that the bloodletting was a buying opportunity, that stocks had dipped enough, that it was time to jump back in with both feet.
So Friday morning, that’s what folks, hedge funds, and HFT algos did: they shook off the unpleasantries of the year so far, and shortly after trading started, the S&P 500 was up 0.9%.
But then everything came unglued. The three major indices fell about 1% for the day. It ended a week to remember: the Dow plunged over 6%, the S&P 500 nearly 6%, and the Nasdaq 7.3%. As MarketWatch titled it so eloquently: “US stocks see worst opening week ever.”
There were some standouts.
Twitter, which lost $1.3 billion over the past three years and which doesn’t know what to do next, saw its shares fall to $19.98, below $20 for the first time ever.
That’s 23% below its IPO price of $26. But that’s not where trading started in November 2013, when QE3 Infinity was still in full swing and when all things were possible, no matter how impossible. Behind closed doors, Wall Street ran up the price. The first trade was at $45.10. Twitter instantly became a Wall Street hero. By December 30, 2013, shares pierced the $70 mark. On Friday, Twitter was 56% below its first-trade price and 71% below its peak.
The Rest…HERE
