Calvert  News & Commentary

Equity Markets Tumble but Recoup Some Losses Late in the Day


Untitled Document

By Natalie Trunow, Chief Investment Officer, Equities
Calvert Asset Management Company, Inc.

Natalie Trunow, Head of Equities Natalie Trunow,
CIO, Equities

On May 6, 2010, equity markets tumbled before regaining some of the losses. The Russell 1000 Index and the small cap Russell 2000 Index declined as much as 8.5% and 10%, respectively, during intraday trading. For the day, the S&P 500 Index was down 3.25%, the Dow Jones Industrial Average declined 3.2%, and the NASDAQ fell 3.44%.  

In the U.S., financial and consumer discretionary names led the decline, while lower beta utilities and consumer staples stocks held up the best. The risk trade is on again for several reasons: investors are taking money off the table after a good run up for the year so far, second-half earnings comparisons are likely to be challenging, increasing concerns about the impact of financial regulation, and worries about the acceleration of the sovereign risk contagion.

We believe Greece is just a catalyst for this move in the market. This correction is a healthy development for the market, although we believe that the U.S. market should do better relative to the rest of the world markets. We may have another sell off May 7th, as investors may want to de-risk their books going into the weekend.

On a technical note, consensus so far seems to be that some erroneous trades cleared in the market intraday that will be unwound. It appears that these trades did not cause the sell off but were precipitated by the sell off.

Calvert Asset Management Company, Inc., 4550 Montgomery Avenue, Bethesda, MD 20814


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