Dow industrials haven’t started the year this horribly in 84 years

Commentary, News, Stocks

Nasdaq and S&P 500 eye worst start to the year since 2001

happy new year

This isn’t exactly how Wall Street was hoping to kick off 2016: The Dow Jones Industrial Average plummeted more than 450 points at one point on reignited fears about China’s economy.

Joining the Dow industrials’ DJIA, -1.96% carnage are the S&P 500 SPX, -1.94% and the Nasdaq Composite Index COMP, -2.35% which are both tumbling the most since last summer, when an earlier bout of China worries rattled investors. This time, China’s equity market has cratered nearly 7%, and a global stock-market rout has followed.

How bad is Monday’s action shaping up? Bespoke Investment Group points out the exchange-traded fund that tracks the S&P 500, the widely held SPDR S&P 500 ETF Trust SPY, -1.87% has opened lower on the first trading day of the year on only two separate occasions in its 22-year history. On Monday, the “SPY” opened sharply lower and has slashed off 2.4% in midday trade.


For the Dow, the plunge, should it hold through the close, is the worst start to a year since 1932, according to Dow Jones data. It would also be only the fourth time that the blue-chips gauge has fallen by at least 2.5% on the first trading day of the year, with 1904, 1922 and the aforementioned 1932 representing the other periods.

For the S&P 500 and the Nasdaq Composite, the slide is on track to be the worst first day of trade since Jan. 2, 2001, when S&P 500 collapsed 2.8% and the Nasdaq plunged more than 7%.

Of course, there are still a few hours left of trading in the U.S. But if the moves in Europe and elsewhere are any indication, it isn’t likely to end well for U.S. stocks.

According to Dow Jones data, in the years the Dow has fallen at least 1% to begin the new year, stocks have ended the year with an annual gain of 9.5%. Dow Jones statisticians, however, point out that the last three times the market has slumped at the start of the year—including 2000, 2001, and 2008—stocks saw a negative return of 15.7%.

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