“In every case except 1940, the S&P 500 had positive returns during the five days after the 10 per cent decline,” according to Barclays. “In two instances (1962 and 2008), the rebound was not sustained and returns over the subsequent 20 days were negative. Still, after 250 trading days the S&P 500 was higher nine out of 10 times, and in most cases it was substantially higher.”
Stodgy plays such as the iShares U.S. Telecommunications ETF (NYSEArca: IYZ), Vanguard Telecommunication Services ETF (NYSEArca: VOX) and the Utilities Select Sector SPDR (NYSEArca: XLU) could be sector ideas to consider over the next several weeks. [Sector ETFs for a Rebound]
These dividend-generating stocks and sectors may also look more attractive after New Yorke Fed President William Dudley hinted that a September rate hike was less likely given the current volatile environment.
SPDR S&P 500 ETF
Tom Lydon’s clients own shares of SPY and XLU.