Recent price action may signal that while stocks have not yet hit bottom, the worst of the bear market is behind usAs March comes to a close, we now see that it indeed came in like a lion and went out like a lamb. Month to date through Mar. 10, the Standard & Poor's 500-stock index declined 4.3% to 1273.37, bringing the total decline from the Oct. 9, 2007, peak at 1565.15 to 18.64%. Since Mar. 10, the "500" advanced 3.3% to 1315.20 through Mar. 28.
Reasons for this reversal of fortune, in our opinion, include the prospects that the first-half weakness in S&P 500 earnings per share will likely mark the bottom of this earnings contraction, and the realization that the Fed will do whatever it can to stabilize the credit and financial markets. In addition, investors may be wondering whether the equity market is bottoming along with consumer confidence. These words of future comfort don't mask the beating investors took during the first quarter of 2008, however, as the Nasdaq fell 14.7%, while the S&P 500, MidCap 400, and SmallCap 600 declined 10.4%, 10%, and 8.4%, respectively.
Within the S&P Composite 1500 index (our U.S. total market index), all 10 sectors posted year-to-date declines in price, ranging from tumbles of 4.2% or less for the Consumer Staples and Materials sectors, to slumps of 16% or more for the Information Technology and Telecom Services groups. Finally, despite double-digit advances for the Trucking (+14.6%), Homebuilding (+12.3%), and Oil & Gas Exploration & Production (+11.6%) subindustries, 117 (85%) of the 137 subindustry indexes in the S&P 1500 fell during the quarter, led by declines in excess of 30% for Oil & Gas Refining & Marketing (-30.6%), Commodity Chemicals (-33.2%), Education Services (-35.2%), Wireless Telecom Services (-37.6%), Managed Health Care (-38.7%), and Consumer Electronics (-38.9%).
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