How about the glory days of having the Nasdaq Composite break the 3,000-point plateau?
What about that time I said stocks would keep up the positive momentum from the first quarter and move into the second quarter with gains as well?
Let’s just think about these high points of 2012 for a second. Mmmm. The memories are nice.
Unfortunately, all we really have to hold on to now are the memories because stocks have taken an unbelievable U-turn over the past month.
Taking a look at the numbers over the past month is absolutely astonishing.
The Dow Jones Industrial Average hit a high mark of 13,338.66 this year, and we all jumped for joy like we had won the World Series. However, the Dow completely wiped away all of its earnings from this year, and currently is sitting at a loss of -1.03 percent on the year.
On the other hand, the Nasdaq Composite, although still in the green on the year at +5.26 percent, still has struggled significantly in the past month by dropping 197 points (6.51 percent). Plus, the high point of the year of 3,134.17 is now far behind in the rear-view mirror, as the Nasdaq currently stands in the 2,750.00 range.
The S&P 500 wasn’t immune to the wrath of May either, and fell a total of 7.38 percent. Even though the point differential isn’t too bad (high of 1,422.38f to low of 1,074.77), the fact that it is currently only up 0.87 percent year-to-date makes the potential of falling into the red seems inevitable.
So why are stocks struggling so much right now, and why do I keep asking myself rhetorical questions?
The first question is easy, but the second one is a little more difficult.
If I could sum up the stock-market issues with one word, it would be…drum roll please…EUROPE.
This may seem like a no-brainer to those of you who follow the news, but the fact of the matter is that the crisis in Europe is hitting a major rough patch right now and the whole global economy is being hurt by it. Greece is threatening to pull out of the Eurozone, which would end with them defaulting on some major loans that they have, and Ireland and Portugal are all under international bailout programs as well.
Basically, the banks are undercapitalized and don’t have the type of cash to support these bailout programs.
In the meantime, just like always, we’ll have to wait and see how it all plays out.