When the Going Gets Tough, Markets Cast Blame Everywhere
Stock buyers fault credit concerns. Bond traders point to equities. Isn’t volatility fun?
Everyone's friends on the way up. On the way down, not so much.
Photographer: Spencer Platt/Getty Images
Last week showed you all you need to know about how traders and investors instinctively react when markets get choppy. They’re dazed, confused and quick to cast blame.
Consider Tuesday, when the S&P 500 Index capped a two-day decline of 3.5 percent to close near the lowest level since May. “The stock market has a debt problem,” a Bloomberg News article declared, highlighting that shares of companies with higher ratings have held up better than those with weaker credit profiles. Conceptually, that makes sense, given the handwringing over the fate of General Electric Co., viewed as the poster child of a flailing company with too much debt. It’s hanging on to ratings in the lowest investment-grade tier as its stock price hovers near the lowest since the financial crisis.