The S&P 500 has gone on to increase on average by 29% in the three years following a 20% plus decline dating back to 1950, according to data mined by Truist chief market strategist Keith Lerner. Stocks have gained 26% on average after a 20% plus fall zooming out and using a two-year timeframe.
Hang in there. (Source: Keith Lerner)
To be sure, most investors probably can’t wait for it to be 2025. In the meantime, while history shows markets mean revert over time, Lerner advised that investors need to be careful at the moment as markets adjust to higher interest rates and weakening economic growth.
“Don’t try to be a hero,” Lerner said on Yahoo Finance Live (video above).
The Dow Jones Industrial Average (^DJI), S&P 500 (^GSPC), and Nasdaq Composite (^IXIC) are down 9.2%, 9.7%, and 10.6% over the past month, respectively, and once-hot momentum names in tech such as Netflix and Apple are being crushed as traders unwind leveraged bets amid rising interest rates.
Market sentiment has been damaged by a convergence of factors.
For one, the Federal Reserve continues on its mission to stomp out inflation by aggressively hiking interest rates. In turn, that has caused ripple effects across an array of asset markets: everything from a surging value for the U.S. dollar to mortgage rates nearing 7%.
Those crosscurrents are beginning to show up in economic data, with the Bureau of Economic Analysis saying Thursday first half Gross Domestic Product (GDP) declined.
We also recently saw a full-year profit warning from North Face owner V.F. Corp. as retailers battle the economic slowdown as well as reports of Apple (AAPL) cutting iPhone production on growth fears — prompting a headline-grabbing downgrade on the tech giant’s stock by Bank of America. Furthermore, earlier this month, FedEx (FDX) shocked the market by slashing its full year guidance.
But what goes down must eventually go back up, right?
An American bald eagle at a bird sanctuary in Millington, New Jersey, on December 12, 2006. REUTERS/Mike Segar
Market instability replaces inflation as the biggest risk, raising the chances of a pivot by the Federal Reserve
Market instability is the biggest risk to central banks globally, replacing inflation, owing to massive amounts of leverage. Market stability affords the Fed the space needed for the most aggressive rate-hiking campaign since the late 1970s. The BOE on Wednesday was forced to start buying bonds to solve a potential crisis with U.K. pension funds.
The Tesla Cybertruck is not yet in existence thanks to multiple delays. “Cybertruck will be waterproof enough to serve briefly as a boat, so it can cross rivers, lakes & even seas that aren’t too choppy.” Musk’s reasoning behind the waterproof functionality is that the Cybertruck will need to be able to travel from Starbase — a SpaceX’s facility located at Boca Chica, Texas — to South Padre Island, which requires crossing the channel.
Why is Russia sending oil and gas workers to fight in Ukraine? It may signal more energy cutoffs ahead
The new Baltic Pipe natural gas pipeline connects Norwegian natural gas fields in the North Sea with Denmark and Poland, offering an alternative to Russian gas. Sean Gallup/Getty ImagesRussia’s effort to conscript 300,000 reservists to counter Ukraine’s military advances in Kharkiv has drawn a lot of attention from military and political analysts. But there’s also a potential energy angle. In its call for reservists, Russia’s leadership specifically targeted oil and gas workers for the draft. On
MOSCOW (Reuters) -President Vladimir Putin said on Thursday that “all mistakes” made in a call-up to reinforce Russia’s military operation in Ukraine should be corrected, his first public acknowledgment that the “partial mobilisation” he announced last week had not gone smoothly. There have been widespread public expressions of discontent from officials and citizens over the way the mobilisation has been handled, including complaints about enlistment officers sending call-up papers to clearly ineligible men. Thousands of men have fled Russia to avoid a draft that was billed as enlisting those with military experience and required specialities but has often appeared oblivious to individuals’ service record, health, student status or even age.
Ukrainian troops are moving to capture the Russian-held eastern town of Lyman, threatening a new setback for Kremlin leader Vladimir Putin’s campaign in the Donbas as he prepares to declare the region part of Russia. The capture of the town in the north of Donetsk region could pave the way for Ukraine to make inroads into the adjacent Luhansk province, foiling Putin’s goal of seizing all of the industrial Donbas region declared after his forces failed to subdue the entire country in February, military analysts said. The regions are among four chunks of eastern and southern Ukrainian territory that Putin is expected on Friday to declare Russian-annexed land after what Kyiv and Western countries say were bogus referendums staged at gunpoint.