The ongoing stock market pullback has destroyed trillions of dollars in wealth.
Key Details
- Despite a strong start to the week, the U.S. equity market is taking a massive hit due to persistent stock market losses.
- The Dow Jones Industrial Average has decreased by 11.8% since August 16.
- The pullback has destroyed $13 trillion in wealth according to research firm Bespoke Investment.
- The market has experienced a 24% year-to-date decline in the Russell 3000 Index, MarketWatch reports.
- “This year has been one for the ages, and not in a good way,” says Stansberry Research’s Matt McCall.
- “While the percentage decline of the two isn’t as bad as it was in the great financial crisis of 2008 and 2009, or even the tech bubble of 2000 and 2001… the dollar amount is easily a record.”
Why it’s important
The loss of wealth reflects the overall state of the economy and the decline of numerous important economic indicators.
As we previously reported, the world economy is grappling with high inflation, skyrocketing energy prices, and fears of an economic recession. The stock market has reacted with precipitous drops several times in 2022. The most recent one came following the Federal Reserve’s announcement that it would be hiking interest rates again.
Possible solutions
McCall is reluctant to predict the near future of the economy, as current trends have the potential to buck historic trends, but he offered some optimism that things will bounce back.
“Both times when we saw larger percentage falls in the past, the markets came back—and came back strong,” says McCall.
“There’s a good chance that the worst is behind us at this point … and the potential upside we could see in the next few years is much higher than the potential downside … There’s a chance that the market will move lower in the near term. And I don’t think it’ll be a rally that goes straight up.”
