Beware the Fear-Mongering Headlines: A Stock Market Meltdown Isn't Imminent

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Stocks Analysis by Investing.com (Calogero Selvaggio) covering: S&P 500, US Small Cap 2000, US Dollar Index Futures, Invesco S&P 500® Equal Weight ETF. Read Investing.com (Calogero Selvaggio)'s latest article on Investing.com

Meanwhile, the S&P 500 has retained its long-term bullish trend despite occasional setbacks like the recent retracement

This begs for a closer examination of stock market returns over the past decade to gain a more balanced perspective on the prevailing situation.has exhibited remarkable growth, surging by more than 200% at an average annual rate exceeding 10%. However, this journey hasn't been without its share of setbacks.The global pandemic triggered a swift 34% decline in just over a month, and we witnessed another 25% dip last year due to the inflationary climate.

Stocks tend to consistently yield significant gains in the long term. To achieve long-term investing success, it's crucial not to be swayed by perpetual predictions of impending crashes. Over a decade, the stock market has risen about 97% of the time, and year-to-year, it has climbed 75% of the time.In addition, the inverted yield curve that brought panic to the markets, heralding an economic recession for over a year, has in recent weeks reached new annual highs making its way back toward the parity level, flattening out.Inflation expectations, as gauged by the ratio of TIPs to IEFs , are on the rise, akin to the patterns observed during the initial Fed rate hike in 2022.

Conversely, when we examine the ratio of Value to small-cap Growth, historical trends reveal that Values tend to outperform Growths during periods of rising 10-year U.S. yields. It appears that this trend is resurfacing once again.Around three months have passed since the onset of the stock market correction. Currently, the indicators appear to be mixed but do not point to an imminent market meltdown.

 

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