Market Research September 2022 – The sell-off continued on Tuesday, with the S&P 500 index falling 7.8% in the normally bullish month of April. With three days to go, it could be the worst April since a 9.0% drop in 1970.
The usual suspects of a slowing economy, a tightening Federal Reserve (Fed), supply chain worries, war in Europe and now another Chinese shutdown have all combined to make this one of the worst starts to the year ever, for both stocks and also for bonds.
Market Research September 2022
However, it is important to remember that medium-term years can be historically rough, averaging more than 17% peak to trough. The closing low of March 8, which was a 13% correction, now remains the low for the year. The good news is that stocks are up more than 32% on average a year after these historical lows.
When Stocks Become Bear Markets
A potential problem is that mid-term inventories are typically lower in the year. “Could stocks fall in March or April for the year? Sure, but history says mid-term yearly lows tend to come later in the year,” explained Ryan Detrick, LPL’s chief financial market strategist. “They would have to chalk that up as a clear potential problem that’s still there.”
As can be seen from the LPL chart of the day, on average for medium-term years, the S&P 500 bottoms on August 14, and the mean bottom is in early September. But the good news for investors to remember is that large annual gains from these lows were fairly common.
Another thing to remember is how strong the bull market has been since the March 2020 lows. As you can see below, this is still the second best start to a bull market ever. After the fastest bull market to double in history, some sort of potential weakness or consolidation shouldn’t come as too much of a surprise.
Many investors forget that double-digit declines within a year are actually normal. After only falling 5% for all of last year, markets have provided a grim reminder in 2022. In fact, the average correction each year since 1980 is 14.0%, putting this year’s 13.0% correction into perspective. Taking it a step further, since 1980, the S&P 500 has fallen in double digits 21 times from its peak, with an impressive 12 of those years managing to bounce back and end the year on a positive note. In fact, its average annual gain over those 12 years was a very solid 17.0%.
Events For September 8
Finally, earlier this year we knew that more volatility was possible, possibly early in the year as that was the playbook in the intermediate-term years. A look at the entire four-year presidential cycle shows that this term is actually the worst of 16. The last semester (year 2, semester 1) and the next semester (year 2, semester 3) are also pretty bad. The good news is that some stronger quarters are just around the corner.
The weakness we’ve seen so far this year has been disappointing and surprised many investors. But after a more than 100% recovery from the March 2020 lows, some sort of usual mid-year frustration was likely. Keep following LPL Research as we help you navigate the investment landscape.
For more on why the economy is unlikely to be headed for a recession and the latest on inflation and the Fed, watch the latest LPL Market Signals podcast with Jeff Buchbinder and Ryan Detrick as they break it all down.
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China Agent Market 2022 Annual Update: Key Differences And Characteristics In Tier 1‒4 Cities
Is the official research blog of LPL Financial. Enter your email address to subscribe to this blog and receive notifications of new posts by email. Tracking economic and housing market trends can help us see where we’ve been. But it’s just as important – and perhaps even more important – to look ahead and predict where the economy and housing market will be headed over the next few months and the next year.
We know that 2020 was an unprecedented year and that 2021 continues to bring extraordinary challenges and uncertainties. In Virginia, the economy lost nearly half a million jobs last year with the outbreak of the COVID-19 pandemic. The economy has been adding jobs slowly and steadily over the past 16 months, but we are still well below pre-pandemic employment numbers.
While the economy faltered and slowly recovered, the housing market has recovered strongly after a deep slump in spring 2020. The hot housing market continued into 2021, fueled by strong demand, low mortgage rates and a trend for some to finish the home.
Overall, these job and unemployment forecasts reflect that our economy is currently still being driven by COVID. We need to enforce the uncertainty and austerity that comes with the Delta variant, and 2022 should bring even more robust economic growth across the country, including here in Virginia.
Digital 2022: Global Overview Report — Datareportal
These forecasts, along with much other information, are available on the Virginia REALTORS® website. Please use any of these materials with your clients, colleagues and teams and do not hesitate to contact us if you have any questions or require additional information.
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