There have been many analysts who have voiced concern for the markets over the past few weeks. Many fear that the bull market’s unprecedented run of success is due for a major correction.
According to Business Insider:
The most recent firm to sound the alarm is Bank of America Merrill Lynch, which forecasts a pullback of at least 10% — the historical definition of a correction — by Valentine’s Day 2018.
In their view, the correction will be the result of a major shakeup in the Fed:
“In our view higher bond yields and higher bond market volatility are necessary to engender a major correction in equity and credit markets,” BAML chief investment strategist Michael Hartnett wrote in a client note.
The Fed chair will be appointed in February which adds even more uncertainty to an already enigmatic market. However, there may be another reason for a correction.
Reuters reported that the FANG stocks were all down this morning “around 1%” with Apple falling even further after reports of lacklustre sales. The major tech stocks have been the workhorses that have pulled this bull market along with their steady growth this year. If these stocks begin to stagnate, then there could be a legitimate fear of a mass selloff.
While concerns for that may be allayed in the coming days, investors should still be on their toes. The amount of impact that the FANG has on all of the major indexes is troubling. If more bad news were to surface over the coming weeks, more investors may feel inclined to take their money and run which could trigger a correction.
It isn’t time to panic just yet, but be sure to stay up to date with the situation.
To read Business Insider’s article on Bank of America-Merrill Lynch and Morgan Stanley’s market prediction, click here.
To read Reuters’ article on this mornings low opening, click here.
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