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Correction Or Conclusion For Bull Market In Stocks?

Published 06/02/2018, 14:35
Updated 06/02/2018, 14:35
© Reuters.

© Reuters.

Investing.com - Investors may be excused for not knowing what to make of the staggering two-day stock market selloff.
On the one hand, Wall Street firms have been calling for a correction in the relentless rally for quite some time.
On the other hand, the most recent Bank of America/Merrill Lynch fund managers survey showed most see the rally running into next year.
Don't be confused by the two.
The Dow Industrials' enormous decline Monday was the biggest in history based on the number of points -- 1,175 -- but on a percentage basis, there have been a few bigger, including the crash of 1987.
Along with the Dow's big loss last Friday, the benchmark index is down 8% from its recent record high.
But that's still shy of the 10% threshold that qualifies as a correction.
Corrections are common, and, analysts say, healthy events for stock markets, even if they are unsettling for investors.
History shows the average bull market correction is 13%, taking place over four months time. It then takes about fourth months to recover those losses.
The current bull market is the second longest on record.
It's also the longest the S&P 500 had gone without a decline of more than 5% since the market crash of 1929.
The recent spike in interest rates, which some are blaming for the selloff, has often spelled the end to bull markets in the past.
So, this could be the beginning of a correction or the beginning of the end of the bull market.
Investors may have to decide on whether to ride it out or take the money and run. 

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