Published Friday, January 28, 2022 at: 8:23 PM EST
Is the market correction done?
The Standard & Poor’s 500 stock index had closed yesterday 10% lower than its all-time high of Jan. 3, officially meeting the definition of a “market correction.”
Today it rebounded sharply, by 2.4%. The correction could be over.
No one can predict the stock market’s next move, up or down. Investor sentiment almost always is capable of swinging stock prices 10% at almost any moment. Eventually, fundamental economic conditions bend market sentiment closer to reality and away from emotional swings, and currently, conditions are surprisingly strong.
Economists surveyed by The Wall Street Journal in early January had predicted GDP growth of 5.8% for the final quarter of 2021. In a big surprise, the Bureau of Economic Analysis Thursday reported actual growth of 6.9% for the fourth quarter of 2021! It propelled a growth rate in 2021 of 5.7% -- the highest rate of growth since 1984!
With economists underestimating the strength of the U.S., economy at the end of 2021, it’s likely their forecasts for the current quarter are also low.
The Standard & Poor’s 500 stock index closed this Friday at 4,431.85. The index gained +2.43% from Thursday and was up +0.77% from last Friday. The index is up +65.81% from the March 23, 2020, bear market low.
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