The stock market in the year 2000 was filled with results that were far short of expectations. The year started with the merger of AOL and Time Warner. This merger was supposed to propel the market forward; however, it has been a burden for the market throughout the year. When January�s trading had closed the NYSE, NASDAQ and S&P were all down and according to the �January Barometer,� the market would close lower than it had started the year. Many investors ignored this warning and put record amounts of money into large-cap and aggressive mutual funds. The NASDAQ made a run on the 5,000 mark and eclipsed it and peaked in mid-March. Since then there has been a steady decline in NASDAQ stocks. The trail on Microsoft was devastating to the technology industry and the stock has dropped more than 50% since the Microsoft trials.
There are countless stories this year of .com companies going bust this year. I don�t believe that anyone could predict the magnitude of the .com bust. The Internet�s biggest stocks such as Yahoo, Amazon, CMGI and Ebay are down upwards of 75% each since their highs. However, the hit in the market this year was not exclusive just to the NASDAQ.
In the NYSE this year traders speculated that the index could reach as high as 12,000 by the end of the year. Today it is struggling to reach the 11,000 mark. The loses in the market were a result of a slowing economy, higher interest rates, a shaky bond market, and a weakening tech sector. There have been a few sectors that have taken off this year. After lackluster performances the energy sector has taken advantage of the oil and natural gas crisis to propel itself to new highs. The good returns in the energy sector could be looked as a double edged sword. The increased amount of money in these stocks could be looked as a defensive play in a midst of a recession. There is one more economic index that has been looked over by many investors.
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In the NYSE this year traders speculated that the index could reach as high as 12,000 by the end of the year. Today it is struggling to reach the 11,000 mark. The loses in the market were a result of a slowing economy, higher interest rates, a shaky bond market, and a weakening tech sector. There have been a few sectors that have taken off this year. After lackluster performances the energy sector has taken advantage of the oil and natural gas crisis to propel itself to new highs. The good returns in the energy sector could be looked as a double edged sword. The increased amount of money in these stocks could be looked as a defensive play in a midst of a recession. There is one more economic index that has been looked over by many investors.
The S&P 500 this year has welcomed various companies in the index. The index has not suffered as sharp of loses as the NASDAQ. It has through much of the year been stuck in a trading pattern reflective of the market. However, during the past three months it has dropped below the range of 1550-1400. The breaking point of the 1400 mark started a sharp decline in all three indexes. During this next year the S&P will be the index to watch for indicating market shifts.
This past year will be considered by some a learning experience. The beginning of the year started with great optimism. However, the tide has turned and investors are looking for ways to reduce risk for this upcoming year. Only time will tell how this year will pan out.
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