The S&P 500-stock index has entered what the financial world calls a correction, technically defined by a decline of at least 10 percent from the market’s peak. It’s a relatively arbitrary threshold, but it’s often seen as a symbol of souring investor sentiment.
Lately, the markets have been rattled by the prospect that a protracted trade war with China could begin to take an economic toll at a time when global growth is slowing.
Viewed over a longer period, however, corrections often begin to look less severe.
Even after the current sell-off, for instance, the S&P 500 through Friday’s close was up by nearly 15 percent since President Trump’s inauguration and more than 21 percent since Election Day 2016.
Over the long run, the markets have risen since the economy came out of recession a decade ago. During that time, there have been a half-dozen corrections, and the declines didn’t presage more significant downturns in the market or the economy.
In the last 20 years, there have been 10 corrections. Only two turned into a bear market, defined as a decline of 20 percent from its high, amid the recessions that began in 2001 and at the end of 2007.
Of course, corrections can be early indicators of a severe downturn in the stock market. And given concerns about the age of the current bull run, some are wondering if the recent selling indicates that an end to the nearly decade-long rally is near.
from Just News Update https://ift.tt/2CdKMlg
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