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While global markets got off to a brutal start in 2016, stocks rallied during the last eight trading days of January, resulting in the month being only the worst start to a year since 2009, rather than the worst January ever! At its lowest closing level, on Jan. 20, the S&P500 was down 12.7% and Canada’s TSX Index was down almost 25% from their record levels set last May. The impetus for the collapse in prices could have been a delayed reaction to the U.S. Federal Reserve raising interest rates for the first time in over 10 years in December, the collapse in oil prices to 2003 lows, weaker global economic data, selling from Sovereign Wealth funds, a hiatus in corporate stock buybacks or a combination of all of those factors. Whatever the cause, sentiment about the outlook for stocks in 2016 turned ‘on a dime’ from the views put forward late last year. The ‘stock market lemmings’ all jumped on the bearish bandwagon as the selloff led strategists at four major U.S. investment banking firms to cut their targets for where the S&P500 will end the year.
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