Where's the Pullback? Stock Markets Defy History
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This is Your Money Matters from The Wall Street Journal.
I'm John Wardock at The Wall Street Journal. Stock markets go up and down. It is a fact of life, except in 2017. Who wrote that? None other than Stephen Rousselillo, who covers the markets for The Wall Street Journal, and he joins us now. Very clever line there, Stephen. Very true this year.
Yeah, thanks so much for having me. So it's been 2017 has really been the year of the steady gradual rise in the markets. And so actually should probably take away rise because we've seen a really short move in some markets. You look at tech stocks and whatnot.
Why have global stock markets risen with almost no 5% pullbacks this year?
But specifically, if you look just in the U.S., Dow S&P 500 up about 10 percent in Europe. You've seen similar gains in Asia. You've seen even better gains. But what really stands out about the moves that we've seen this year is the fact that if you look at these charts, markets have literally basically just gone straight up. There's been very little bumps along the way. It's really like the markets have been on autopilot. And so that has really been what that's what's been so shocking about what we've seen a little bit into the second half here of 2017.
Obviously, no correction, no 10% correction here. No major sell-offs. I mean, no hiccups, it seems, and no pullbacks. As you mentioned, autopilot, it seems.
Yeah, so let's go through the stats a little bit. If you look at U.S., Asia, and Europe, those three, as measured by the S&P 500, MSCI Europe, and MSCI Asia Pacific, excluding Japan. So we'll use those three benchmarks, okay? Okay. none of them have had a five percent pullback this year. Now, that has never happened in at least the past three decades. OK, so what does that mean? That means that somewhere along the line, either one of those regions or two or all three, they go down for a little bit and then they come back. And that's the typical course. That's the typical trajectory. But we haven't had that at all so far. And so that's really what is happening. kind of startling to some people because a lot of people are looking at this and watching the markets and saying, it has to go down at some point, right?
Markets go up, markets go down. That's what happens. And so people are nervously watching this. Watch this unfold.
Can we call this a Superman rally? It's up, up and away.
So that's what's happening now. You know, can it continue? Sure. Of course it can continue. Can it go down? Of course it can go down as well. I mean, that is not the most insightful piece of analysis, but That's really where we sit right now. I mean, at some point, if the market does go down, you're going to see people say, oh, of course, this was long overdue. Mathematically, markets have to go down by this point. But the flip side of that is you still see central banks that are very, by and large, they're very accommodative right now. You see earnings growth that is really strong across the world right now. And you see economic growth that is slow but steady and actually improving in most areas. So you know, a lot of people say, well, hold on.
Well, what about politics? What about, you know, there's so much turmoil in the U.S. There's Brexit. What about that? And at least for now, what we've seen in markets is that earnings, the economy, they have overshadowed any sort of political turmoil that we've seen around the world.
We're talking with Stephen Rusolillo. He covers the markets for The Wall Street Journal. And this is Your Money Matters from The Wall Street Journal. Thanks, everyone, for listening. Steve, we should let everyone know you're joining us from Hong Kong via Skype. And when you look at the major averages on Wall Street, Dow up more than 9% so far this year as we're chatting, NASDAQ up more than 18%. I did a triple take looking at the NASDAQ composite year-to-date number. What? And then the S&P up some 10%. From your view there in Hong Kong, What do you make of all this? Are you scratching your head every day? Are others you talk to scratching their heads?
Yeah. So a lot of this gets back to this historically low volatility environment that we've heard so much about over the past several weeks, several months, really.
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