With the S&P 500 officially entering a bear market early Tuesday, investors were scrambling for guidance as the fourth quarter began.
The S&P 500 index has fallen more than 20% since spring, which included a dismal third quarter for stocks that saw the Dow Jones industrial average ending 12% lower on Sept. 30, at 10,913, compared to three months earlier. To underscore the volatility of the past few months, the three major indexes on Tuesday rallied at the close, with the S&P 500 jumping 24.52 points, or 2.23%, to end at 1,123.75.
Overall, though, nervous investors have been trimming positions in front of the fourth quarter after the equities market’s terrible September, while the dollar and U.S. Treasuries were beneficiaries of panic buying and credit spreads ballooned, wrote investment strategist Ben Warwick of Aspen Partners on Monday in a column for AdvisorOne.
“Although the European debt crisis, the slowdown in emerging markets and concerns of a double-dip recession are still in people’s minds, few clients I spoke to believe that the legislative or executive branches of the U.S. government either understand or can successfully manage the domestic economy,” Warwick said.
He advised advisors to keep a close watch on “the rebalancing button,” and recommended that they take advantage of the current dislocation between equity and fixed income markets.
October is notorious for being a rollercoaster stock market month, said Randy Warren, chief investment officer at Warren Financial Service, noting that financial advisors are wasting no time in battening down the hatches.