Is a Stock Market Correction Coming Soon?
Is a big stock market correction coming? Notice any patterns?
The stock market has recently reached an all-time high, and many people are looking at their brokerage accounts and celebrating. However, I wouldn’t pop the corks on those champagne bottles just yet. There’s a chance that this bubble is about to burst with a big stock market correction on the horizon.
A fifteen-year look back at the S&P 500 might shed a little light on why many financial professionals believe a correction is coming.
Notice any patterns? Each of these peaks in value was built on a market bubble. We had the “dot com” bubble in 2000-2001, and the sub-prime lending bubble in 2007-2008. Each of those bubbles burst and was followed by a sharp correction in the market.
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Stock Market at Risk; New Indicators Reveal a Sputtering Economy
Anemic growth barely hovering above zero in the first quarter of 2014 exposed the depths of a lingering and persistently weak U.S. economy. Gross Domestic Product edged up by a scant 0.1 percent, the slackest pace of growth since late 2012.
New Factory Orders gained just 1.1 percent in March, missing expectations of a bounce from a 1.5 percent rise in February. Wages were flat in April compared to March, with the average hourly wage for private sector workers settling at $24.31—a 1.9 percent from April 2013. The average workweek at 34.5 hours was also unchanged from March, though it was up slightly from April 2013.
Stock market reaches all-time high, but now is not the time to celebrate
The stock market has recently reached an all-time high and has many looking at their 401Ks and celebrating their exceptionally good fortune. However, I wouldn’t pop the corks on those champagne bottles just yet. There’s a chance that this bubble is about to burst.
The question is why is the stock market so high when so many other economic indicators are performing poorly or are in a downright tailspin?
Fox News reports that household income levels have dropped by a significant 8.2% in the last four years. Drudge reports that 8.5 million Americans left the labor force during that same time period while unemployment remains unacceptably high at 7.9%. It was suggested on Forbes that the real unemployment rate is somewhere in the neighborhood of 14.7%. USA Today reports on the anemic growth of the US GDP. Even Forbes asks the question, “Why is Wall Street winning right now and everyone else seems to be losing?”
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