Lindsey Bell, Ally's chief investment strategist, joins Closing Bell to discuss today's markets and whether or not investors should worry about a significant downturn hitting the markets soon. For access to live and exclusive video from CNBC subscribe to CNBC PRO: https://cnb.cx/2NGeIvi
The Dow Jones Industrial Average and S&P 500 Index just suffered five straight days of losses and their worst weekly performance since — wait for it — June. Investors went into the summer easing up a little bit on stocks and have exited the summer with a similar bout of selling. Is there any more to it? Is the big one — the stock market correction bears have been waiting for — finally about to drop?
Many of the major factors cited for a potential selloff are well-known to investors, implying it is harder to see how at this point they would be the ones to cause a correction. There’s the delta variant. There’s the Federal Reserve taper and shift in central bank policy amid a sudden slowdown in job and economic growth. There’s the latest political headline — new wrangling in Washington D.C. over a corporate tax hike, capital gains taxes and potential tax on stock buybacks to help fund President Biden’s spending plan, as well as debate over the debt ceiling.
And there is the issue that has trailed stocks at every new record set during this bull market (and the bull market that preceded, or depending on your view, was interrupted by the pandemic): stock valuations are high.
There are also short-term pressures to consider: the “seasonal choppiness” of the fall, which market strategists say is real, and recent U.S. equity market downgrades from major Wall Street banks, which could keep pressure on shares, especially with so much of the recent money coming into the market from retail investors. But it is always more likely something investors can’t see coming (such as a pandemic) causes a historic market selloff than everything investors already know.
That makes technical market indicators and the historical performance of the S&P 500 one reasonable way to gauge whether investor confidence will outlast the latest round of selling.
For Keith Lerner, co-chief investment officer and chief market strategist at Truist, the history of the S&P 500 suggests that the bull market isn’t done yet, even if gains moderate.
Since 1950, there have been 14 years where the market has been up more than 15% through August. Stocks went on to add another 4% by year end, on average, and climbed in 12 of the 14 instances.
Stock selloffs are to be expected
Pullbacks are to be expected. The deepest pullback in 2021 has been roughly 4%. That is not typical, according to Lerner’s review of the data. The only two years in the historical data set that did not see at least a 5% pullback in the S&P 500 were 1995 and 2017. And history says gains that occur rapidly have to slow down. Lerner notes in his research to clients that the current bull market has gained 102% in 1.4 years versus the average bull market gain of 179% over 5.8 years since 1950.
» Subscribe to CNBC TV: https://cnb.cx/SubscribeCNBCtelevision
» Subscribe to CNBC: https://cnb.cx/SubscribeCNBC
» Subscribe to CNBC Classic: https://cnb.cx/SubscribeCNBCclassic
Turn to CNBC TV for the latest stock market news and analysis. From market futures to live price updates CNBC is the leader in business news worldwide.
The News with Shepard Smith is CNBC’s daily news podcast providing deep, non-partisan coverage and perspective on the day’s most important stories. Available to listen by 8:30pm ET / 5:30pm PT daily beginning September 30: https://www.cnbc.com/2020/09/29/the-news-with-shepard-smith-podcast.html?__source=youtube%7Cshepsmith%7Cpodcast
Connect with CNBC News Online
Get the latest news: http://www.cnbc.com/
Follow CNBC on LinkedIn: https://cnb.cx/LinkedInCNBC
Follow CNBC News on Facebook: https://cnb.cx/LikeCNBC
Follow CNBC News on Twitter: https://cnb.cx/FollowCNBC
Follow CNBC News on Instagram: https://cnb.cx/InstagramCNBC
https://www.cnbc.com/select/best-credit-cards/
#CNBC
#CNBCTV
0 Comments