Market is falling, but don't panic

After rising for three years, U.S. stock prices on Monday fell along with world markets.

But most Americans aren't feeling investors' pain: Some of the same forces driving shares down are also trimming the cost of gasoline and food. And analysts say the market swoon is unlikely to slow hiring or damage an improving economy.

With key stock indices off by more than 10 percent since peaking in mid-May, "the market is now officially in 'correction' territory," Daniel Roccato, president of $95 million asset Quaker Wealth Management L.L.C. in Moorestown, told clients Monday.

Biotech stocks, retail, software and other sectors "hit bear market territory," dropping 20 percent from highs this year, said Ernie Cecilia, chief investment officer at Bryn Mawr Trust Co.

Among the hardest hit local stocks were SEI Investments, PREIT, Brandywine Realty, Universal Health Services, Pep Boys, and Urban Outfitters, down 7.1 percent to 5.3 percent.

What is spooking traders? Roccato, who also teaches finance at Rutgers University, listed "the rigged Chinese market," where prices have fallen below year-ago levels; declines in a few U.S. stocks such as market-leading Apple, which gets one-sixth of its sales from China, and builds iPhones there; falling gasoline, meat and other commodity prices, which hurt corporate suppliers while boosting small businesses and consumers; and uncertainty over Federal Reserve interest-rate targets. Besides stocks, junk bond and commodity prices are also down. The fact that all three dropped together is a sign of "panicky or forced selling," said Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott.

Whatever its day-to-day moves, "this market is going to sell off sharply, until the selling exhausts itself," wrote James M. Meyer in a report to clients of Boenning & Scattergood in West Conshohocken.

Gasoline heading below $2 a gallon and supermarket beef falling toward $3 a pound is good news for most Americans, Meyer and others noted.

The U.S. dollar is expected to rise as investors seek quality. That will cause a drop in exports, which combined with falling feed-grain prices will promise cheaper U.S. meat, said Jonathan Feeney, Berwyn-based food-industry analyst for Athlos Research.

The stock "correction is a buying opportunity," argued Jason Pride, director of investment strategy at $30 billion-asset Glenmede Trust, an investment manager in Philadelphia. Glenmede analysts said early Monday that investors "should remain patient" because stocks likely had further to fall.

Professional investors rushed to reassure clients worried about a repeat of the 2008-09 market collapse. Consider doing "nothing," Vanguard Group, whose clients' assets topped $3 trillion in the recent market run-up, urged investors in a note quoting chief executive Bill McNabb.

Beyond the minority of Americans who own company shares, "economic fundamentals still look pretty good in the U.S.," said Patrick Kaser, who manages large-company value stocks for clients at Brandywine Global Investment Management in Philadelphia, which manages over $60 billion.

Whatever the weakness in Asia, U.S. "housing looks strong, we have an auto sales report that looked strong, employment looks strong," at least "for people who can pass a drug test and don't have a criminal record," Kaser added.

Weak stock prices don't affect most U.S. purchasing or hiring decisions, Bill Stone, Philadelphia-based chief investment strategist at PNC Wealth Management, told clients.

To the contrary: Strong home sales and other data "point to solid economic growth in the United States," Stone wrote. "The U.S. stock market is a notoriously poor predictor of economic growth."

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