Nasdaq Exits Correction TerritoryBy Kevin Kennedy
The Nasdaq rose almost 22 points to close above 2,300 for the first time since May 18. It’s now 9.2% below its 52-week high of 2,535.28, below the threshold of more than 10% off the 52-week high that signifies a correction.
The Dow and S&P 500 also closed higher. Both indices had crawled out of correction mode Wednesday. The Dow is 9.3% off its high and the S&P 500 is 9.6% below its peak.
The Russell 2000 index of small cap stocks rose more than 1% Thursday, but is still 10.5% below its high.
All four indices topped out April 26. The Nasdaq and Russell 2000 closed in correction territory May 7, the day after the so-called May 6 “flash crash.” All four indices then stayed out of correction territory until May 20, when all four fell below the 10% mark. The Nasdaq had been more than 10% off its high since then until today’s close, while the Dow and S&P 500 have posted some closes above in the meantime.
Despite a lot of media, adviser and investor hand wringing, none of the four indices has come close to the 20% off their high required to enter bear market territory. Historically, most corrections don’t lead to bear markets, instead serving in most instances to serve as the pause that refreshes ahead of another market advance.
You can follow the daily market closes and key market news developments in my Coolcat Market Short Shots.
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INVESTING CoolcatReport.com Publisher Kevin Kennedy shows Forbes readers how patient investors can profit when superstar stocks take a little breather.
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