Fallen giants block path to recovery as Amazon drops

Anyone expecting a quick exit from the first global bear market in four years should take a look at all the money being lost in sectors dear to individual investors.

In a switch from 2015, consumer and technology companies have come to dominate the list of worst-performing American stocks this year, with declines stretching past 20% for Amazon and Netflix. Optimism is being squeezed just as the worst start ever for US equities erases about $2.5trn (€2.23trn) from brokerage accounts.

Broadening losses in industries that had previously avoided them is fuelling pessimism in a market where gauges of bearish sentiment are already approaching levels from the financial crisis. Declines in global equities reached 20% last week for the first time since 2011, falling from their highs of last May.

“The old leadership really got taken out to the woodshed,” said Chris Bouffard, chief investment officer who oversees about $9bn at Mutual Fund Store. “You’re going to have to find a replacement for those for the index level and the corresponding sentiment to get back to a healthy place. And that’s going to take time.”

Stocks fell last week, with the Standard & Poor’s 500 Index extending its 2016 retreat to 8.8%, as banks around the world suffered losses amid concern negative interest rates will hurt profits. In Investors Intelligence’s survey of newsletter writers, the ratio of bulls to bears slipped to 0.63, the lowest level since March 2009.

Consumer discretionary and technology firms account for more than half the 50 S&P 500 stocks with the highest individual ownership. News Corp, a publisher of the Wall Street Journal and New York Post, is the most popular and the stock is down more than 19%.

Investors are exiting last year’s winners after valuations for consumer stocks reached a five-year high. Amazon, which more than doubled in 2015, has slumped 25% as the web retailer reported a fourth-quarter profit that fell short of analysts’ estimates. Netflix, up 134% last year, is down 24% as US subscriber growth slowed at the world’s largest paid online TV network.

While housing was a bright spot in fourth-quarter GDP, US housing shares are suffering. Also dropping are car makers.