Dow Turns Negative YTD Amid Rare All-In Risk-Off Days

YTD SOS

The Dow Industrials started off 2020 in gangbuster fashion, with every day closing higher than 2019’s closing level. That was all given back in recent days, and on Monday it fell into negative territory year-to-date.

Other years that started off with gains then gave them back 2-4 weeks into a New Year struggled a bit over the next couple of weeks but then usually recovered over the medium-term.

Risk-off

The stock market's drop on Monday and last Friday saw clear risk-off behavior. The U.S. stock market, emerging markets, copper, oil, and the 10 year Treasury yield all fell, while gold jumped on Friday and Monday. Such clear back-to-back risk-off behavior is not common, and has only occurred 11 other times from 1988-present.

This kind of behavior was not consistently bullish (or bearish) for stocks, including emerging markets. Other markets were also mostly mixed, though it was slightly bullish for gold. And especially so for bonds (if yields decline, bond prices rise).

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