More S&P components are in a bear market than are not in a correction
With its latest in a series of hefty drops on Thursday, the U.S. stock market officially entered correction territory.However, a not-insignificant number of stocks have gone far beyond that threshold.
According to FactSet data, 96 of the S&P 500's components are in a bear market, meaning they are trading at least 20%below their 52-week high. More than a dozen of those components crossed the 20% threshold with their Thursday drops.
While the components in a bear market includes names from across sectors, a number of energy stocks have been leadingthis trend. Range Resources Corp.(RRC.NaE) is down 62% from its 52-week high, the biggest such drop of any S&P component.Chesapeake Energy Cop. (CHK) is in second place with a 57% decline, followed by Baker Hughes, a GE co. (BHGE) , which isdown 56% from its 52-week high.
The decline in Baker Hughes, an oil-field-services company, is partially related to the ongoing weakness in GeneralElectric Co.(GE.NaE) which has shed more than half its value since its most recent 52-week high, making it the fourth-largest decliner. GE has been struggling for months, but its most recent leg lower followed the industrialconglomerate's fourth-quarter results and its disclosure of an SEC investigation (http://www.marketwatch.com/story/ge-stock-turns-lower-after-disclosure-of-sec-investigation-2018-01-24). The stock is on track for its lowest close since2011.
When it comes to a correction, or a 10% drop from a peak, the results are even more dramatic. Only 88 of the S&P 500'scomponents are not in a correction, meaning more than four-fifths of the index are. The S&P 500 is down 10.2% from arecord hit earlier this year, while the Dow Jones Industrial Average is down 10.4% and the Nasdaq Composite Index isoff 9.7%.
The Dow's components have largely held up, with GE the only blue-chip in a bear market, a trend that started wellbefore the recent turmoil in the broader indexes. However, of the 30 companies that make up the Dow, only six are lessthan 10% below their 52-week highs: Cisco Systems(CSCO.NaE) , Nike Inc.(NKE.NaE) , Walmart Inc. (WMT) , Boeing Co.(BA.NaE) ,United Technologies (UTX) , and JPMorgan Chase & Co.(JPM.NaE)
On a sector level, eight of the 11 primary S&P 500 industry groups are in correction territory, led by utilities,which have tumbled more than 16% from their recent peak. The group--along with other so-called "bond proxies" (http://www.marketwatch.com/story/bond-proxies-take-it-on-the-chin-as-yields-rise-2018-02-07)--have been pressured by the recentrise in bond yields, which makes the sector less attractive to income-seeking investors.
-Ryan Vlastelica; 415-439-6400; AskNewswires@dowjones.com