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Nearly a fifth of S&P 500 stocks are in a bear market

MarketWatch logo MarketWatch 2/9/2018 Ryan Vlastelica
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With its latest in a series of hefty drops on Thursday, the U.S. stock market officially entered correction territory. However, a not-insignificant number of stocks have gone far beyond that threshold.

According to FactSet data, 96 of the S&P 500’s components are in a bear market, meaning they are trading at least 20% below their 52-week high. More than a dozen of those components crossed the 20% threshold with their Thursday drops.

While the components in a bear market includes names from across sectors, a number of energy stocks have been leading this trend. Range Resources (RRC) is down 62% from its 52-week high, the biggest such drop of any S&P component. Chesapeake Energy (CHK) is in second place with a 57% decline, followed by Baker Hughes (BHGE), which is down 56% from its 52-week high.

The decline in Baker Hughes, an oil-field-services company, is partially related to the ongoing weakness in General Electric (GE) which has shed more than half its value since its most recent 52-week high, making it the fourth-largest decliner. GE has been struggling for months, but its most recent leg lower followed the industrial conglomerate’s fourth-quarter results and its disclosure of an SEC investigation. The stock is on track for its lowest close since 2011.

When it comes to a correction, or a 10% drop from a peak, the results are even more dramatic. Only 88 of the S&P 500’s components are not in a correction, meaning more than four-fifths of the index are. The S&P 500 (SPX) is down 10.2% from a record hit earlier this year, while the Dow Jones Industrial Average (DJIA) is down 10.4% and the Nasdaq Composite Index (COMP) is off 9.7%.

The Dow’s components have largely held up, with GE the only blue-chip in a bear market, a trend that started well before the recent turmoil in the broader indexes. However, of the 30 companies that make up the Dow, only six are less than 10% below their 52-week highs: Cisco Systems (CSCO), Nike (NKE), Walmart (WMT), Boeing (BA), United Technologies (UTX), and JPMorgan Chase (JPM).

On a sector level, eight of the 11 primary S&P 500 industry groups are in correction territory, led by utilities, which have tumbled more than 16% from their recent peak. The group—along with other so-called “bond proxies”—have been pressured by the recent rise in bond yields, which makes the sector less attractive to income-seeking investors. 

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