The stock market has been surprisingly resilient in 2020. Despite a stock market crash in March and the September sell-off, the S&P 500 is up 12% year-to-date, while the Nasdaq is up more than 27%.
That said, ongoing uncertainty and volatility has led some to suggest the stock market correction that began in September is just getting started, and that it could result in a 10% stock market correction or crash over the last two months of 2020.
All of the major stock market indices are up in 2020, leading many to believe that momentum will carry stocks higher in the last quarter of the year. But it appears as though the reverse could happen. The stock market has struggled to find direction and any rallies that have emerged have been short lived.
When Will the Next Stock Market Correction Happen?
We predicted the September sell-off back in August, but that doesn’t make it any easier to swallow. September was an abysmal month for the broader stock market with the S&P 500 losing 3.5% of its value, the Nasdaq slipping 4.5%, and the Dow Jones Industrial Average falling around 1.5%. The TSX ended September down close to two percent.
This represented the first monthly loss for all four of the major North American indexes since the coronavirus pandemic hit North America in March. October has been no better, with uncertainty around the U.S. presidential election, a barrage of alarming tweets from President Donald Trump, and a second wave of the coronavirus rattling markets.
On top of that, a stimulus deal, which everyone has said is crucial for sustained economic recovery, has been sidelined until after the election. All of this points to near-term volatility. But that shouldn’t be a total surprise.
After each of the last eight bear markets, which dates to 1960, the stock market experienced 13 corrections or crashes (pullbacks of between 10% and 19.9%), within three years of the bear market lows.
What this shows us is that every new bull market experienced one or two large corrections or crashes, after hitting a bear market low. With so much uncertainty, Wall Street predicts the stock market will experience a 10% correction from current levels before the end of 2020.
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The stock market has been surprisingly strong in 2020. But there are a large number of headwinds that could derail that momentum. In fact, Wall Street expects the stock market to experience a 10% correction from current levels before the end of 2020.
Even if this does happen, the trading experts at Learn-To-Trade.com can teach you how to trade with confidence and profit more consistently.
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