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Market selloff post-Thanksgiving was the 3rd worst on record

Yahoo Finance's Jared Blikre provides historical context to Friday's selloff.

Video transcript

- Welcome back. Well, markets are continuing their volatility on what is typically a quiet day, the day after Thanksgiving. But not so today, all on those fears of a new COVID variant. It might be a good thing that it is an abbreviated session because it can halt some of the bleeding.

But our Yahoo Finance's Jared Blikre has been watching it all. Jared, it's got to be one of the worst Thanksgiving drops ever.

JARED BLIKRE: Yeah, and you'd be surprised. A lot of people are going to be biting their nails over the weekend, waiting to see what happens Monday. I ran some interesting stats. I went back to the beginning of the Dow all the way in 1896, and chose and took a look at some of the top-10 worst days. Now let's go to the WIFI Interactive, and just check out today's price action real briefly.

Here is the Dow, you can see down 2 and 1/2%. Here's the NASDAQ, also close to its session lows off 2%, and the S&P 500 about in the same place. Well, here are those stats I've been looking at-- let me pull these up here-- and basically, a lot of these are spread throughout history. Now going back to 1896-- that is a long period of time, 125 years-- you can see up top at the number one spot is November 28, 1919.

Basically, 102 years ago, Dow dropped 3.52% that particular Thanksgiving Day, or I guess, day after Thanksgiving. And then in the number two spot-- it looks like these are reversed here-- we do have 1931. That was a drop of 2 and 3/4%. And then we find ourselves right here in 2021. Last I checked, Dow was off about 2 and a 1/3 points. I'm checking that right now.

Yeah, it's going to close about at these levels. And then you see '87, 1920, 2009. I think 2009 is pretty instructive here, guys, because that was the last time that we had a major drop on Thanksgiv-- or, the day after Thanksgiving on a Black Friday. And that was a time when we had the first round of QE one running, it was still ongoing. We had the sovereign debt crisis were the focus back then. But the stock market managed to be able to climb into the close. So I think it was instructive that that was the low for this period. We have a lot of liquidity in the market right now.

I'm going to key off this for a second, and let's just take a look at what has been happening in these charts recently. So I'm going to bring up a chart of the S&P 500 over the last two months. This drop here is pretty severe, given the time of year and given the liquidity. But I just want to note that the intermediate trend here is still definitely-- still very much in place. One thing that caught my eye is the VIX. We did have a little bit of complacency built into the market. Maybe this works it off, maybe it doesn't.

Also looking at the bond market, we have the 10-year T note yield-- or, excuse me, the five-year, that is down 14 basis points. We haven't seen a drop that big since March of 20. So there is a lot going on here. Could it get worse next week? Yes. But I'm looking for a potential turnaround in the early part of the week. And if we close above the current-- I would say, above Wednesday's levels on Tuesday-- so give us two more closes, I would say we're pretty much in the clear, guys.

- Yeah, certainly a lot of people hoping for that. Let's head out to the New York Stock Exchange where the Salvation Army is ringing in the closing bell. The Salvation Army there to kick off the Red Kettle bell ringing season. It is a staple during the holiday season.

But as we look right now where the Dow closed down more than 900 points, certainly an ugly day after Christmas. And to Karina's point, a lot of investors really just thankful this was a shortened holiday session.