Analyzing The Market Correction

The Standard & Poor's 500 index fell into correction territory Friday — dropping more than 10% since hitting its all-time high — and closed the week at 2,658.69.

The 60 economists surveyed by The Wall Street Journal in early October predicted GDP would grow in the third quarter by 3.4% and an average quarterly GDP growth rate over the five quarters ahead of 2.7%.

While the precise cause of a market correction is always debatable, earnings expected on the S&P 500 companies in 2019 is likely a factor. Wall Street earnings growth expectations for 2018 and 2019 of 22% and 11%, respectively, are well ahead of the S&P 500's historical trend rate of growth. This accounted for the market's strength in recent months, as the long bull run recently became the longest-ever bull market in post-War America.

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This article was written by a veteran financial journalist based on data compiled and analyzed by independent economist, Fritz Meyer. While these are sources we believe to be reliable, the information is not intended to be used as financial advice without consulting a professional about your personal situation.

Indices are unmanaged and not available for direct investment. Investments with higher return potential carry greater risk for loss. Past performance is not an indicator of your future results.

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