The U. S. stock market typically weathers significant declines or “corrections” during any calendar year. The J. P. Morgan’s graphic highlights this. Obviously, the “jury is still out” on 2015’s calendar year performance. Notably, as the first seven months of 2015 played out, industry sectors rotated and declined in “a rolling correction”. As we commented in our email last week, the stock market continues to struggle and recalibrate global profit growth expectations.
Given events thus far, a fair historic parallel for current conditions is the 1997-1998 period where a Thai devaluation kicked off an Asian Emerging Markets crisis which included a 50% crude oil price haircut. Yes, the combination shook Capital Markets yet the U. S. economy continued to grow through the mostly overseas turmoil. The graphic displays how our stock market eventually bounced back.