The booming stock market, now well into its ninth year of a bull run, hit a snag this week. Thursday saw double digit declines in all three major indexes, with the Dow suffering its worst day in nearly two months, while the Nasdaq and S&P 500 had their worst days in over three months. The Dow lost 201 points, the Nasdaq fell 145 and the S&P lost 29.
Concern about rising interest rates was the biggest factor cited by market analysts, but KTRH Money Man Pat Shinn with Heritage Asset Advisors says there are other factors at work. "What the market has been most focused on is inflation, fears of inflation," he says. "And the first warning sign of that usually comes from wages." For that reason, he predicts investors will be keeping a close eye on Friday's jobs report to see where wages are.
Looking further down the road, Shinn says to watch for the next round of company earnings reports due out this month. "The market is fixated on what the earnings are going to be for the third quarter, and more importantly forward guidance going into the fourth quarter," he tells KTRH. "Are (companies) going to make their number for the full year?"
Perhaps the biggest factor for the markets moving forward is the ongoing trade dispute between the U.S. and China. "Trade and tariffs with China, that is what is driving the market more than anything," says Shinn. "And if we can come to some sort of resolution with China in terms of trade, I think that's what sends global markets higher."
Trade policy, interest rates, inflation and other factors may ultimately be a signal of a more intangible market influence...father time. "The stock market of course is in its ninth year of expansion, and the longest (expansion) in history is ten years, so we're getting kind of long in the tooth," says Shinn.