Stocks are off to their worst start in more than 50 years

Yahoo Finance markets reporter Jared Blikre breaks down how the Nasdaq's start this year compares to years prior, in addition to the sector and bond market action.

Video transcript


SEANA SMITH: Today marks the end of the month of June for the market. It's the end of the second quarter, and the end of the first half of the year. You can see that all three of the major averages ending the day, lower Dow off 253 points, S&P off nearly 1%. The NASDAQ was the biggest loser of the three major averages off just over 1%. It was a very rough couple of months for the market, the S&P recording its worst start to the year since 1970. The NASDAQ 100 having its worst start to the year since 2002.

Let's talk a little bit more about this with Jared Blikre. And Jared, that mount of selling, the massive scale of the selling that we saw over the last six months, has all of us trying to figure out where exactly we're headed next.

JARED BLIKRE: It's pretty incredible, especially when you factor in what happened with the bond market. But this is just the NASDAQ. Or this is the Dow, excuse me, having its worst year since 1962. I want to focus on the NASDAQ. This is its worst year ever. It goes back to 1971. You can see right here, obviously we don't know what's going to happen for the rest of the year. But down 30%. That is an incredible number. In 2002, after the tech bubble burst, it was down 25%. Same thing for 1973.

And you look at the returns for the next six months, these are negative here. We had some positive returns such as 1984, and also in 19-- what is that? 1982. But I would say this. When you have the beginning of a secular bull market like we did in the '80s and it kind of lasted through the '90s, you're going to find that we did have more snap backs when we had a first six months of the year that was very negative. Now we could be heading into a secular bear market.

If that is the case, probably not going to see some gains for the rest of the year. We could easily see the market down. But if we have an echo rally of the tech bubble that we had over the last 10, 12 years, and that could happen if the fed pivots, then we're probably going to see some more money going into some of these beaten down sectors.

Now if we take a look at what has happened year to date, it is pretty ugly out there. This is the NASDAQ 100. You can see a lot of dark red. And if you sort by performance, you can see at the bottom, Peloton down 74%. That is the worst in the group. Netflix down 71%, PayPal, 63%, Aligntech 64%. We do have some leaders though. And what I do like to do is screen for what has been working recently. This is year to date. But let's check out what happened over the last month.

We can see KWEB. That's Chinese internet stocks. That's a ETF. That's up 12 and 1/2%. Chinese stocks bottomed about a month ago. IBB, that's biotech. TAN, that's solar energy. So if we're trying to find a bottom here, which we may, these are probably some of the sectors that are going to go up the most.

SEANA SMITH: Jared, what about the bond market? Because we spend so much time focusing on the equity markets. The bond market, we saw an interesting move today when it comes to the 10 year, the yield falling just below 3%.

JARED BLIKRE: Yeah, that's a big one.


JARED BLIKRE: That's a big one. Let me show you what's happened here. This is a two month chart. Let's get that. You can see we have come really strongly down off of these highs. Now we touched 3%. And we got a big reaction off of that. But now we are breaking below. So what happens with gross-- when we see the 10 year T note crashing like this, that means growth stocks could be in favor.

So this could be supportive of the notion that the beaten down sectors enjoy a bear market rally. Now how far is that going to go? We don't know. I don't think we're going to get to new highs. But we're just kind of waiting around for that next flashy rally.

SEANA SMITH: We'll see what the catalyst is. All right, Jared Blikre. Thanks so much.