A Shocking Number of Stocks Are in the Red. Here’s Why That’s a Bullish Sign
Nasty market drops like the recent one usually include the majority of stocks. Recently, declines have been harsh on even wider swaths of the market than usual, and that could present a buying opportunity.
The S&P 500 has dropped 21% from its early January all-time high. One of the most powerful drivers of that has been high inflation. Rising costs are also reducing profit margins, something consumer staples companies are certainly dealing with. The inflation has spurred the Federal Reserve to plan many interest-rate increases, which would further reduce economic demand and earnings growth. Plus, higher rates on long-dated bonds make future profits less valuable, causing stock valuations to plummet.
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