Wall Street suffers worst quarter since 2011

By Money Times

Oct 02, 2015 03:50 AM EDT

The US stocks were beaten down adversely during the third quarter ended September as Wall Street recorded bleak performance in any quarter ever since 2011. Barring limited bargain buying, there was no much buying support in the market.

The fears about China's economy slowdown, Yuan devaluation, uncertainty over US Fed interest rate hike, oil price drop, slump in global commodities market and Greece economy crisis have been taking a toll on the Wall Street. Adding to this, the drug price regulation factor had sent biotech stocks spiraling down for seven sessions in a row.

More than half of the S&P-500 stocks tumbled over 20 percent during the quarter. The over 10 percent drop in the third quarter brought much-needed correction to the market, which continued to upsurge for 1,326 calendar days. 

The last session of the third quarter witnessed sharp gains on the Street as investors have preferred to build up positions in the hammered down stocks taking bargain advantage. The latest victim of the market selloff was biotechnology sector, which rebounded on Wednesday. Trading analysts feel that the rebound is likely to be sustainable. 

The Dow Jones Industrial Average during the third quarter fell 7.6 percent, S&P dropped 6.9 percent and Nasdaq shed 7.4 percent. For September month alone, Dow eased 1.5 percent, S&P shed 2.6 percent and Nasdaq dropped 3.3 percent. 

The last session of the third quarter recorded heavy trading as 8.52bn shares were traded on the US bourses as against the average volume of 7.28bn for the previous 20 sessions, according to data from Thomson Reuters.

The third quarter witnessed the market crash of over 10 percent bringing much-needed correction to the market which continued to upsurge for 1,326 calendar days without an official correction.

S&P 500 tumbled 12.4 percent on 25 August from its peak. 253 stocks more than half of S&P500 basket were down over 20 percent during the quarter. The biotech shares fell for eight sessions in a row. Nasdaq Biotech Index fell 20.1 percent before rebounding on Wednesday by four percent.

The market is under bear phase and it requires strong third quarter numbers and indications on US economy recovery to bring the Wall Street back into positive territory.

Energy, healthcare and materials stocks were hammered down during the third quarter. Investors are looking to nonfarm-payrolls report and third quarter earnings season for positive cues that will boost the Wall Street.

Investors are slowly withdrawing from overreacting to speculation on possible rate hike by US Federal Reserve and started focusing on economic data ahead of third quarter earnings season beginning next week. The US Federal Reserve requires some more improvement in the job market.

The Fed expressed it confidence that inflation is set to rise before taking a decision to hike interest rates. 

Since 2006, the US Fed has not raised the interest rate, which has been at a near-zero level all these years. Inflation is below the two percent target of the US government.

Brain Fenske, Head of Sales Trading at ITG in New York, said: "I don't think there was a specific piece of news driving the market today. We got oversold. When everybody gets bearish quickly, you tend to get these bounces."

Dow Jones Industrial Average added 1.47 percent to 16,284.7 points. S&P 500 index gained 1.91 percent to 1,920.03 points. Nasdaq Composite added 2.28 percent to 4,620.17 points on the last session of the third quarter.

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