Stock Market Correction Is Deepest Since August, But Drawdown Is Still “Normal”
The latest sell-off in the US stock market isn’t unusual – S&P 500 Index corrections of -5% to -10% from previous peaks are relatively common. What’s different and unusual this time is the trigger: A trade war initiated by the President of the United States.
The question is whether the current incarnation of trade-war risk that’s weighing on market sentiment persists and leads to a deeper drawdown? That’s challenging to forecast, to say the least, primarily because the market’s path ahead is heavily dependent on President Trump’s future decisions on trade policy. Given his mercurial nature, it’s fair to say that deciding what’s likely on this front is highly uncertain.