Some investors are worried that we are entering a bear market where confidence will dip, and prices will continue to fall. However, there are still top analysts like JP Morgan who believe that stock market woes are not reflective of the actual state of the economy and the strength of U.S. companies.
Investors are in shock this week as stock indexes have fallen dramatically. Tech prices have been hard hit, and, as some of the largest stocks on the market, this has offset gains made in other industries.
JP Morgan Says There’s No Bear Market
Chief Global Strategist for JP Morgan Funds, David Kelly, told CNN on Wednesday that “It’s not a bear market. The market’s down about 10% from peak. That’s a very normal correction within a year. We’ve seen that most of the time.”
For a bear market to truly emerge, the U.S. would have to enter a period of recession with reduced economic output. Gross Domestic Product (GDP) has been healthy throughout this year and growth of 3.5% was recorded in Q3. While the expansion of the economy is slowing, it has more to do with interest rates and a concentrated effort by the Federal Reserve to prevent overexpansion and high inflation.
Kelly believes that both the administration and the Fed will work to maintain a stable economy and potentially inject some life back into the stock market.
The analyst told CNN that “If we could just give ourselves some certainty about trade, just say we’re not going to have higher tariffs, if we get to that, I think that would be really a very big positive for the global economy.” He called the trade war a “war of choice, not a war of necessity” and indicated that the White House would likely try to find common ground with China, or at least prevent future tariffs.
Kelly also predicts that the Fed will limit its rate hikes next year because the economy is slowing.
Stocks for the Year to Date
The stock market may be down today and well into correction territory, but the underlying economy is strong and company earnings are up. It may only be a matter of time before investors find confidence again, especially once prices stabilize.
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