The destruction in some of these big capitalization stocks really does take your breath away. You can tick down the sectors that seem like they have simply cratered; sectors like oils, industrials, airlines and autos.
A lot of the moves seem counterintuitive. We got a terrific number yesterday, for example, from Carnival Cruise (CCL), a number that indicated that travel's very robust. But the airlines, after an uproarious run, now seem to all be hanging by a thread. How bad can business be? I think the group, rightly or wrongly, trades together and it peaked with the game-changing MH-17 air disaster. The group's really been problematic since then, with now even the strongest domestic carriers like Southwest (LUV) and Spirit (SAVE) taking hits.
I know the actual percentage declines in the auto stocks aren't horrendous of late, but if you look at General Motors' (GM) stock you will see an equity down almost 20%. Ford (F) is more respectable but it is nothing to write home about. The losses from the top are sizable for both, and General Motors has been one of the worst stocks out there.
The industrials can't seem to stop rolling over, the longer the Russia-Ukraine situation goes on. I can't believe that United Technologies (UTX), long a loved stock, acts so poorly. Is there an order that Boeing (BA) hasn't won of late? And yet it now seems to be in the grips of a selling wave.
Plus, we keep hearing that truck orders have peaked and home sales have peaked and oil prices, and therefore most oil stocks, have rolled over. These are big parts of the stock market and they aren't going to be made up by takeovers no matter how myriad, and the big biotechs and health care stocks that won't come in.
In fact, the market's become ridiculously bifurcated, where stocks with good yields that are involved in the consumer packaged goods industry are incredibly strong but stocks with other yields, twice as high, act incredibly badly, because people seem to simply not trust the dividends. A remarkable situation, given all the coverage there is out there.
It's like the rally has gotten thinner and thinner, with just a few stocks leading and not a lot following. It certainly didn't help that the areas holding up best, the healthcare stocks that have been buoyed by inversions, both actual and potential, got the rug pulled out from them by a Treasury Secretary who just three months ago said he couldn't do so.
Now, this doesn't have to end up badly. The stock of Bed Bath & Beyond (BBBY) had been downgraded endlessly, including yesterday morning, so when the company delivered comparable store sales double the endlessly slashed estimates, the stock soared in after- hours trading, a move that continued this morning. But when the once reliable and consistent Ascena (ASNA) disappointed, its stock dropped an astounding 16% even as it hadn't been anything to write about for ages. That's a bad risk reward.
Maybe conviction matters? Restoration Hardware (RH) rallied 3% because its CEO Gary Friedman bought two million dollars' worth of stock in the open market.
But for the most part, this market's become a vicious bearish playground, with most people now fearing number cuts like we got from the big industrial company Dover (DOV) during the day.
Yes, the velocity of the decline seems to have been broken. However, again, without a resolution in Russia or faster growth in China, we will not have the breadth needed to mount the advance that so many expected running into the final quarter.