March 15, 2011 Prices Off Some-Far Less than Japans -11 Percent
On the second trading day after Japans nuke disaster, American stocks declined more than a full percent. Not a good day yet the losses are significantly smaller than overseas. Japans market lost 11 percent today, on top of Mondays -6.2 percent drop. These rates make the NASDAQ decline of -1.25 percent seem moderate.
Yet this difference in losses need not indicate indifference to overseas tragedy. While our reaction clearly is milder, these price changes nevertheless are almost identical to the setbacks experienced after the Three Mile Island misfortune. The S&P500 fell -.35 percent on March 28, 1979; -.02 percent the next day, then -.43 percent and – .68 percent on the fourth day after.
Seven years later, the American financial markets response to the Chernobyl meltdown again generated similarly mild price declines. That happened also over the weekend. On the Monday following, the S&P500 lost a mere -.33 percent. The drop became steeper on the following day as the S&P500 fell -1.1 percent, and by 2.1 percent on Wednesday. What is more on Thursday, as the calamity worsened, the S&P500 reacted with just a -.15 percent loss.
Consequently, a straightforward analysis of todays pattern may yield a better projection of tomorrows prices. In the past, the day following two declines resulted in an even distribution between a further, third decline and a price recovery.
DJIA -1.15 percent
NASDAQ -1.25 percent
S&P500 -1.12 percent