Stocks ended a bloody, turbulent week with a broad-based slump Friday, sending the tech-heavy Nasdaq to its worst weekly losses in 30 months and eviscerating what remained of the Dow Jones industrial average’s 2014 gains. The Dow, down 335 points Thursday in its worst single session performance of the year, fell another 115.15 points to 16,544.
About 47 percent of stocks in the Nasdaq Composite Index are down at least 20 percent from their peak in the last 12 months while more than 40 percent have fallen that much in the Russell 2000 Index and the Bloomberg IPO Index. That contrasts with the Standard & Poor’s 500 Index, which has closed at new highs 33 times in 2014 and where less than 6 percent of companies are in bear markets, data compiled by Bloomberg show. The divergence shows the appetite for risk is narrowing as the Federal Reserve reins in economic stimulus after a five-year rally that added almost $16 trillion to equity values.
Marc Faber has long predicted that a collapse in U.S. stocks is coming.
People have such short memories. Even though we are repeating so many of the same patterns that we witnessed in 2000-2001 and 2007-2008, most people do not think that another financial crash is coming. In fact, with the stock market setting record high after record high lately, I have been taking quite a bit of criticism for my relentless warnings about the coming financial storm.
Markets could soon face a fall of up to 60 percent, two experts told CNBC on Wednesday. A jolt to international confidence in central banks will lead to a 30 to 60 percent market decline, David Tice, president of Tice Capital and founder of the Prudent Bear Fund, told CNBC’s “Power Lunch.” When this happens, he said, markets will face a “period of extreme turmoil.
