FX Evolution: You Won’t Believe How Similar These Markets Are
The market’s recent selloff has had several comparisons to the Crash of 1987. The one-day, 22% decline in the Dow reshaped how markets operate. The recent market selloff was far smaller. But it does have a number of similarities.
For starters, both markets were up considerably for the year. Markets were already having an above-average year going into the recent turbulence. And will still likely end the year in the green, as in 1987.
However, it could also be a sign of market weakness. In 2024, the Magnificent Seven stocks continued to drive the overall market higher. There’s been some sign of market breadth improving in recent weeks. But a shift to smaller companies could still lead to an overall market decline.
Meanwhile, economic data is coming in about where investors expect. The labor market continues to weaken. That will make it appropriate for the Federal Reserve to start cutting interest rates later this year.
For now, markets may have a bit more volatility in the coming weeks. The Crash of 1987 took nearly three weeks of sideways trading before stocks started to trend higher.
And once markets did start to trend higher, it took months for markets to get back into the swing of a full bull run. That could happen again, so investors have a few more months of likely sideways trading.
To see the full comparison of different markets, click here.