The summer stock market slump and what Wall Street pros are saying about it 📉
Remember TKer Stock Market Truth No. 2 📉
The stock market has had a rocky couple of weeks. The S&P 500 is down almost 5% in August.
As I noted in the August 7 TKer, it’s not unusual to see some volatility this time of year.
More generally, sell-offs are normal in any given year.
As Carson Group’s Ryan Detrick observed, the average year sees at least three separate corrections of at least 5%.
It’s not hard to back into reasons traders and investors might be selling: Interest rates have been rising; economic growth has been strong, raising the risk of more hawkish monetary policy; valuations have been above average; the world’s second-largest economy is stumbling; and the Russia-Ukraine war continues.
Every major sell-off in history has been accompanied by a mix of economic concerns, monetary policy shifts, geopolitical tensions, or some other source of consternation that might make a rational person demand a higher premium for putting their capital at risk. The details are different each time. But structurally, it's generally the same story: it's risky out there.
This is not to downplay any current concerns. Rather, it’s a reminder that there are always things to be concerned about. In fact, it’s these ever-present uncertainties that hold back stock prices and explain why long-term returns in the stock market can be relatively high.
Occasionally, a major risk will emerge that threatens the short-term outlook for earnings and warrants a major adjustment in the stock market. But I’m not so sure that’s what we’re experiencing right now. Unfortunately, we’ll only know in hindsight.
With that in mind, here’s a roundup of what some of Wall Street’s top stock market experts are saying right now:
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