Thursday Market Note: Stocks Off 12 Percent in 2Q

carousel, generic Broken Wall Street Sign, Wall Street, Stock Exchange, Recession, Stock Market, Broken, Finance, Bankruptcy, Great Depression
CBS

Unless you're Elin Nordegren, you probably woke up poorer today than you were three months ago. (The British tabloid The Sun reported that Tiger Woods will pay his soon-to-be ex-wife a whopping $750 million as part of their divorce settlement.)

The rest of us must console ourselves by facing the grim reality of the second quarter results: the Dow down 10 percent to 9,774, its first quarterly decline since Q1 of 2009 -- the period during which the index fell to its bear market low. The S&P 500 lost 11.9 percent to 1,030 and is now 15 percent below its April 23 high. The NASDAQ tumbled 12 percent to 2,109. Bond and gold investors were the winners on the quarter: 10-year treasuries gained nearly 6 percent and gold was up 12 percent.

If there is one silver lining to the market's tumble is that it coincides nicely with the calendar. Many retirement plans offer automatic rebalancing, which puts some of your investment decision-making on auto-pilot. Let's say that you had started the quarter with an allocation of 60 percent stocks and 40 percent bonds. Due to the market action, your current allocation may have shifted to 55 percent stocks and 45 percent bonds. Rebalancing would force you to sell 5 percent of your bond position and use that to add 5 percent to your stock position. In other words, you would be selling high and buying low. If your plan doesn't offer automatic rebalancing, you can do it yourself, but only on a quarterly basis; more than that is not necessary.

In today's action, I should note that every trader with whom I spoke this morning is tired and counting down the minutes until tomorrow's employment report. Currently, Asian and European stocks remain under pressure after China's purchasing managers' index was weaker than expected. The data add to investor concern over the pace of global recovery. U.S. stock futures are pointing lower.

  • Jill Schlesinger On Twitter» On Google+»

    View all articles by Jill Schlesinger on CBS MoneyWatch »
    Jill Schlesinger, CFP®, is the Emmy-nominated, Business Analyst for CBS News. She covers the economy, markets, investing and anything else with a dollar sign on TV, radio (including her nationally syndicated radio show), the web and her blog, "Jill on Money." Prior to her second career at CBS, Jill spent 14 years as the co-owner and Chief Investment Officer for an independent investment advisory firm. She began her career as a self-employed options trader on the Commodities Exchange of New York, following her graduation from Brown University.