Wednesday marked the last day of Q3 2015 — the worst quarter in four years. But the broad-based S&P 500 rose 1.9%, closing with a 6.9% loss for the quarter and a 2.6% loss in September.
Institutional buying at the end of Q3 accounted for much of the rebound. Managers of large portfolios were said to be scooping up consumer discretionary, biotech and technology stocks that have been hit hard by recent selling in hopes of Q4 gains that will result in bonuses.
Institutional favorites like Microsoft Corporation (MSFT), Facebook Inc (FB), Google Inc (GOOG, GOOGL) and stocks in the iShares NASDAQ Biotechnology Index (ETF) (IBB) saw big gains on the day. But Apple Inc. (AAPL), a traditional favorite, rose just over 1% during regular hours and fell 0.4% in after-hours trading.
Crude oil ended its worst quarter of the year, down 24%, with a 0.3% decline to $45.09 a barrel.
Gold fell 1% to $1,115.50 an ounce. The decline in gold and the rise in the U.S. dollar were attributed to better U.S. economic data.
At Wednesday’s close, the Dow Jones Industrial Average rose 236 points to 16,285, the S&P 500 gained 36 points at 1,920, the Nasdaq advanced 103 points to 4,620, and the Russell 2000 was up 17 points at 1,101.
The NYSE Composite’s major market traded 1.2 billion shares with a total of 4.4 billion. The Nasdaq crossed 2.3 billion shares. On the Big Board, advancers outpaced decliners by 3-to-1, and on the Nasdaq, advancers led by 2.6-to-1.
On the chart of SPDR S&P 500 ETF Trust (SPY), only five sell signals have been issued over 18 years, of which two — in 1998 and 2012 — were quickly reversed. No reversals have resulted following a deep decline like that experienced in August and September. We must therefore conclude that a major downtrend has been signaled, beginning in August.
Bear markets are nasty affairs, with stocks averaging 30%-plus declines. Thirty percent of the SPY’s high at $214 is about 65 points for a downside target of about $150. And 30% of the Dow’s high at about 18,350 is roughly 5,500 points for a downside target of 12,850.
That’s the bad news. The good news is they are usually much shorter than bull markets. Perhaps it will even be a case of “sell in May and go away until Halloween.”
Today’s Trading Landscape
To see a list of the companies reporting earnings today, click here.
For a list of this week’s economic reports due out, click here.