Economic guru Jeremy Siegel advises investors to jump in and buy if the stock market continues to plunge.
Dow futures pointed to a third straight day of losses on Tuesday, deepening a correction to the stock market’s long-running rally that saw the biggest intraday fall in history for the Dow Jones Industrial Average on Monday, Reuters explained.
"The market went up too far too fast," the Wharton Business School professor told CNBC.
"There's a saying on Wall Street: Up the staircase, down the elevator," he said.
There's no "puzzle" for the market's decline, Siegel said. People were worried about rising interest rates and inflation and they "jumped off the train," CNBC quoted him as saying.
"The market worked extremely well, and we're getting down to reasonable levels now," Siegel said. "People who buy this morning a year from now are going to say, 'OK, I think I've got a good price.'"
To be sure, Dow futures pointed to a third straight day of losses on Tuesday, deepening a correction to the stock market’s long-running rally that saw the biggest intraday fall in history for the Dow Jones Industrial Average on Monday.
The CBOE Volatility index, or VIX, a measure of expected swings in the S&P 500, jumped to 50.30, its highest level since August 2015, on Tuesday.
“It is hard to say (if the selloff will deepen today). A lot of people were surprised by yesterday’s action. The sharp drop in the afternoon seemed to be mainly programmed trading,” said Scott Brown, chief economist at Raymond James.
“These kinds of corrections are a normal process. Where the bottom is I don’t know but the fundamentals haven’t changed.”
The stock market has been on a bull run for the past nine years, helped by a growing economy, strong corporate earnings and an extremely loose monetary policy by central banks.
U.S. share values have also climbed further since President Donald Trump’s election on the prospect of tax cuts, corporate deregulation and infrastructure spending, and the S&P 500 is still up 23.8 percent since his victory.
However, some investors say the market is over-stretched in the context of rising bond yields as central banks withdraw their easy money policies of recent years.
Meanwhile, Trump continued to tout the economy on Twitter.
"Thanks to the historic TAX CUTS that I signed into law, your paychecks are going way UP, your taxes are going way DOWN, and America is once again OPEN FOR BUSINESS!" he tweeted.
(Newsmax wire services contributed to this report).
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