Big down days have been few and far between for U.S. stock markets of late. So today’s 1% pullback in the S&P 500 is a distinct change in direction.
This marks the first time the benchmark index has fallen more than a full percentage point in one day since July 20. It’s just the fifth down day of 1% or more since the beginning of June.
Is this the beginning of a late arriving September sell-off? Perhaps. It’s the sixth time in seven sessions that the index has fallen. But that seems like more of a correction than anything else.
QE3 was announced on September 13, boosting stocks 1.6% that day. Since then the S&P 500 has all but returned to where it was the day before the Fed unveiled its latest bond-buying plan. Overall, stocks are still up 2.5% in what is typically the market’s worst performing month of the year.
So stocks could continue to fall in the next few days as the QE3 after-glow continues to fade.
My colleague Andy Crowder predicted this would happen. Beginning with QE1 in 2009 and continuing through the extension of Operation Twist back in June, each subsequent Federal stimulus effort has had less of an impact on stocks than the one before.
Sure enough, QE3’s impact – at least so far – has been minimal. Really, it only lasted one day.
Stocks have slowly crept downward ever since. Today that move was a bit sharper.