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CFOs Expect a Dow Jones Crash: Is Double-Dip Next?


Jun. 2 2020, Published 8:08 a.m. ET

  • According to a CNBC survey of global CFOs, most of them expect the Dow Jones Index to crash below 19,000 or its March lows.
  • The phenomenon is called a “double-dip” or a “double bottom.” Before the survey, Paul Tudor Jones and Jeffrey Gundlach also predicted that US stock markets would crash to their March lows.
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Dow Jones crash

A CNBC survey of global CFOs revealed that most of them expect the Dow Jones to crash below 19,000 levels. Notably, the Dow Jones index was below 19,000 in March. However, US stock markets bottomed on March 23. They rose sharply in April and closed May in the green as well. The Nasdaq Composite is positive for the year. While US stock markets have been strong, several analysts and fund managers have warned about a crash.

US stock markets

The CNBC survey showed that 51% of global CFOs think that the Dow Jones will crash below 19,000. However, 22% expect the index to create a new high without any major declines in the way. The remaining 27% of the global CFOs weren’t sure about what direction US stock markets will take.

Last month, Bank of America’s fund manager survey also showed that most of them see the rally in US stock markets as a typical “bear market rally.” Previously, a UBS survey of HNI clients showed that most of them expect stock prices to fall. So far, the US stock market crash has been a mirage. The Dow Jones has risen almost 40% from its March 23 lows.

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US stock markets: Double bottom

Before the survey, several other observers, including Paul Tudor Jones and Jeffrey Gundlach, said that US stock markets would fall to the March lows. Such a double bottom or double-dips aren’t uncommon after crashes. In the 2008–2009 stock market crash, the Dow Jones created a double bottom.

However, US stock markets defied the pessimism even though valuations have started to look expensive. Mark Howards, David Tepper, Mark Cuban, Stanley Druckenmiller, and Jim Rogers warned about valuations and the risk-reward scenario.

Dow Jones is still underperforming

Meanwhile, the Dow Jones Index (NYSEARCA:DIA) has been underperforming the Nasdaq Composite (NASDAQ:QQQ) and the S&P 500 (NYSEARCA:SPY) this year. The Dow Jones has fallen 10.7% year-to-date, while the S&P 500 has lost 5.4%. The Nasdaq Composite has risen 6.5% during this period. Stock futures point to a weak opening today. However, barring the usual declines, US stock markets haven’t crashed yet despite all of the predictions. Read Should US Stock Market Crash Proponents Admit Defeat? to learn more.


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