Stock Market Crash: 15-20% Drop Likely With Recession, warns Economist

History shows a recession would mean a rough ride ahead for the stock market, Goodwin said.

She pointed out that the median GDP drawdown during recessions since World War II has been 2.5%, while unemployment has jumped a median 3.4%, and earnings have fallen a median of almost 21%. "Further market volatility could arrive as recession does. For example: even if valuations in the S&P 500, measured by the price-to-earnings ratio remained stable, then the median 21% drop in earnings per share cited above would result in an S&P 500 correction of 15-20%," she said.

With the index trading around 4,300 currently, a 20% drop would bring it down to around 3,425. Earlier this week, it officially reentered a bull market after advancing 20% from its lows in October. Goodwin said that unemployment may not start rising until the fourth quarter this year, given the lag effect of rate hikes.of Piper Sandler told Insider in May that he expects stocks to fall another 25% by year-end as the economy begins to slow and jobless claims rise.

He highlighted that year-over-year growth of jobless claims is likely to turn positive soon, signaling a recession, and that negative earnings growth estimates have dipped negative, also a reliable signal of a downturn."I feel like a weather man who's coming out at the end of May and saying, 'In December it's going to be cold.

Ireland Ireland Latest News, Ireland Ireland Headlines

Similar News:You can also read news stories similar to this one that we have collected from other news sources.

Stock Market News: GameStop shares slump, S&P 500 near bull market, SCOTUS on student loansS&P 500 nears bull market, jobless claims jump, GameStop fires CEO and Ryan Cohen takes over, Carvana recovers and SCOTUS on student loans. FOX Business is providing real-time updates on the markets, commodities and all the most active stocks on the move.
Source: FoxBusiness - 🏆 458. / 53 Read more »

Gary Gensler: Crypto market is like 1920s stock market, full of 'fraudsters'SEC Chair Gensler says crypto market is full of “Ponzi schemes' and “frauds” that can only be cleaned up with securities regulations.
Source: Cointelegraph - 🏆 562. / 51 Read more »

Stock Market News: Tesla shares jump, Target downgraded again, S&P’s new bull marketThe S&P 500 is in a new bull market, more troubles for Target as the retailer gets another downgrade, Tesla’s winning streak continues as the stock pushes higher and all eyes are on the Federal Reserve’s meeting next week as investors handicap a potential pause to the rate hike cycle. FOX Business is providing real-time updates on the markets, commodities and all the most active stocks on the move.
Source: FoxBusiness - 🏆 458. / 53 Read more »

Stock market outlook: Bull market could falter with higher ratesThe bull market in stocks could disappear as investors get whacked by even higher interest rates and higher unemployment from the Fed's inflation fight, Bank of America says
Source: BusinessInsider - 🏆 729. / 51 Read more »

Morgan Stanley says this materials stock can rally nearly 20% as earnings outlook improvesThe firm upgraded shares to overweight from equal weight.
Source: CNBC - 🏆 12. / 72 Read more »