NC State Ag Economist Dr. Mike Walden – “When Will the Stock Market Drop?”


Mary:  This is Mary Walden with economist MW, welcoming you to the economic perspective.  Today’s program asks when the stock market will drop.  Mike the stock market has made incredible gains in the past year, rising over 20% in past year.  Now I know you don’t try to predict the direction of the market, but what factors should investors track to give them some handle on where the market is headed?

Mike: Summary Answer

  1. And, of course, what investors are worried about is when – or if – the market will change direction and head down
  2. I recommend tracking four factors to get a “heads up” on a market turn
  3. 1 – housing starts – if begin to trend downward, good indicator of a market shift
  4. 2 – consumer sentiment – since consumers drive the economy, if their optimism shifts to pessimism, good chance market will follow
  5. 3 – Likewise, the Conference Board’s Leading Economic Index is designed to pre-date a shift in the economy, and by extension, the stock market
  6. 4 – when an inverted yield curve appears – meaning short rates are higher than long rates – one of the best indicators of an on-coming recession
  7. Still – a tall order to predict the market!
  8. I’m MW

Mary:  And I’m Mary Walden for N C State Extension.