Wall Street’s advice to investors battered by plunging markets: Keep buying stocks.
With markets plunging for more than a week, and no relief in sight, some of the biggest brokerages on Thursday afternoon and early on Friday told their advisers that clients should not flee but instead buy into the panic.
“Mr. Market is often wrong and panic selling is dangerous,” David Bianco, chief U.S. strategist for Merrill Lynch global research, wrote in a strategy note. “Panic selling in a correction is dangerous, as the best days usually closely follow the worst.”
The benchmark S&P 500 Index sank into “correction” territory on Thursday, falling more than 10 percent from highs reached in April, and slipped again on Friday despite an early rally inspired by an encouraging job growth report.
Federal lawmakers reached a debt-ceiling agreement this week that removed the threat of a U.S. default and briefly inspired a burst of optimism. Yet investor sentiment quickly became gloomy again amid persistent views that weakness in the U.S. economy and spreading sovereign debt problems in Europe would lead to another slowdown.