What goes up must eventually come down.
And after a year that has seen stock prices soared to record highs,a correction was long overdue.
Stocks do not go up forever and so after about a 30 percent rise over the course of the last 13 months or so.What was probably the most predicted event on the face of the planet actually occurred and that was a pullback.
Think of the pullback is a reset switch that keeps financial markets from overheating.
The stock market has gone too far,too fast.
Investment manager James McBride says that reset came Fridayafter a solid jobs report showed U.S. wages finally starting to rise.
You know they haven’t gone up for it seems like forever and that created a perception in the marketplace and inflation is right around the corner that the Federal Reserve is gonna start raising interest rates.
The concern is that a rapid rise in inflation could prompt the U.S. central bank to raise interest rates more aggressively.
But equity capital markets chief investment officer Altan Ergun says don’t blame the traders.
He says nearly two-thirds of all stock trades are initiated by computer algorithms.
Actually program trading and the machine trading what we consider to be the majority of the trading in the markets.So when this sell-off started,it’s our belief that the sell-off get exaggerated to the downsideand that was one of the reasons in my view that he has such a sharp sell-off.
On the other hand,a sharp sell-off is an opportunity for bargain hunters,which is likely why Wall Street went the other way Tuesday when the Dow closed 567 points higher following a turbulent day of trading.
Strangely absent from the discussion,president Donald Trump who’s taken credit for the record run-up in stocks,but speaking to lawmakers on Tuesday Treasury Secretary Stephen Mnuchin doubled down on the White House claim.
Again I think he will still claim credit for the fact that it’s up over 30% since the election.
But as almost any economists will tell you, the stock market is not the whole economy.
Mil Arcega for VOA news,Washington