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Don't Panic: One Rough Day of Trading Won't Ruin 2016

  • Little predictive value seen in first-day return of S&P 500
  • Global benchmarks tumble after China stocks lose 7%, close
Bloomberg business news

2016: More Turbulence for the Markets?

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On Jan 2, 2008, the first trading day of what would end up being the worst year for stocks in seven decades, more than $200 billion was wiped from U.S. share values as the Standard & Poor’s 500 Index lurched 1.4 percent. An exploitable signal for bears as markets melt down today? No.

Sure, shorting the market was profitable in 2008, but basing the decision entirely on the Jan. 2 rout would have been foolhardy -- or at least unscientific. That’s because gains or losses in any year’s inaugural session since 1904 have matched the annual direction of U.S. stocks exactly half of the time, with the size of the move adding no additional predictive value.