The Stock Market’s Drop Is Worse Than It Looks. Here’s Why.

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The stock market is having a bad day—and it’s even worse than it looks.

The

Dow Jones Industrial Average
fell 0.8%, while the

Nasdaq Composite
declined 0.7%, and the

S&P 500
dropped 1.1%.

Those drops aren’t pleasant, but the pain is even worse under the surface. Just 50 stocks in the S&P 500 are higher on the day, a dismal reading on market breadth. In fact, on days when fewer than 100 stocks finished the day in the green, the S&P 500 has dropped an average of 2.2% and a median of 1.9%. That’s basically twice as much as the S&P 500 was down. When fewer than 50 stocks were up on the day, the S&P 500 averaged a 3.5% drop.

When the S&P 500 is having a “better” day than the typical stock in the market it’s usually a sign that big stocks are doing better than small, and that seems to be the case on Wednesday. The small-company

Russell 2000
has dropped 1.8% today, while the Invesco

S&P 500 Equal Weight ETF
(RSP), which gives big and small stocks the same weighting in the fund, has fallen 1.4%.

Tesla

(TSLA),

Alphabet

(GOOGL), and

Exxon Mobil

(XOM)—with market caps above $450 billion—were among the stocks that finished higher on the day, while Carnival (CCL),

Expedia

(EXPE), and trucking company

J.B. Hunt

(JBHT)—with market caps less than $21 billion—were among the biggest losers.

it’s exactly the kind of rally you don’t want to see when the stock market is trying to find a bottom. And it’s the kind of day that’s a reminder that the stock market is still in a bear market, despite the recent rally. “Although the S&P 500 has so far escaped a traditional bear market based on the level of the index using closing prices, the weakness under the surface is clearly in bear market territory.”

Still.

Write to Ben Levisohn at [email protected]