While the market is still on its back leg from the stumble it took in January, everyone is fearing the worst, with expectations that the market’s poor performance will become a trend with inflation and the Omicron variant running amok.
However, financial experts aren’t convinced there’s a reason for panic, their reasoning being that the market has always been volatile, and while it may not have been like that to this degree, market corrections up to a 10% pullback are common occurrences in a bull market like this one.
S&P 500 and the Dow are both back within barely 7% under their recent highs, and even Nasdaq, which is comprised of hundreds of tech companies is only down 14% and still up for correction in the following days.
Corrections don’t always mean that even more pullbacks are inbound, and it’s shown by the fact that only a few analysts are actually showing a bear market in their projections for the next couple of weeks.
James Solloway stated that in the past, most corrections have ironed themselves out in less than 5 months, and this statistic dates all the way back to 1966.
Assuring that a bear market isn’t coming in the near future, he added that volatility wasn’t always a sign that the market will be pulling back, and that the ups and downs are simply part of its natural cycle.
Bear market, not a real threat early February
Dan Cupkovic, manager at Amplify BlackSwan Growth believes that the inflation rate will fall off as the year progresses and the economy eases back into its pre-pandemic spot, going as far as claiming that the next few years will be nothing but easy money.
He also completely blew off any arguments that a bear market was around the corner, pointing at the bear market that happened in March 2020, which was right after stocks were soaring to astronomic heights.
Finally, the main culprit for the massive stock plummet in 2022, was the rapid crashing of a tech stock, ranging from Meta, formerly known as Facebook, to Microsoft and Tesla, both of which are industry names.
Meta’s stock dipped more than 30% this year, and streaming platforms like Amazon and Netflix are down 7% on average even though good results were reported only last Friday.
Finally, tech giants Microsoft and Tesla, have both underperformed, with their stock down 10% and 15%, respectively, with only Apple and Google bubbling towards the top due to their innately strong earnings.
The tech stock plummet also meant that investors would quickly look to other places, and energy stocks seem to have been everyone’s first pick, as Chevron has seen a 15% gain while Exxon Mobil is up more than 30%.
This might spell disaster for the general public, which has already been struggling with the disproportionately high oil and gas prices, but as long as the oil giants are making money, investors don’t, and won’t care.