FIRST AIRED: February 14, 2018

Nice work! Enjoy the show!

×

You’re busy. We get it.

Stay on top of the news with our Editor’s Picks newsletter.

US Edition
Intl. Edition
Unsubscribe at any time. One click, it’s gone.

Thanks for signing up!

We've got more news

Get our editor’s daily email summary of what’s going on in the world.

US Edition
Intl. Edition
Replay Program
0:00
0:00
More Info

COMING UP:Share Opener Variant 4

×

Transcript

00:00:01
>> Relative calm returned to Wall Street Tuesday. So far the tone this week is vastly different than last, when dizzying drops sent stocks plunging 10% from record highs into correction territory, and set off worries, a bare market could be next. That's when stocks fall 20% from highs. Reuters' Wall Street correspondent, Lewis Krauskopf, has been talking to historians and strategists, and right now, history is on the side of the optimists.
00:00:32
>> So when you look at the economy, people are pointing toward the strong earnings outlook that companies have right now. The S&P 500 is supposed to post earnings growth of about 19% this year. People point to that, they point to other solid economic data, and it leads them to conclude that with the economy fairly stable, that if we're going by past corrections, that this one is unlikely to deepen to the point that the stock market pulls back by 20%.
00:01:02
>> Goldman Sachs took a look going back to 1976 and pointed out of the past 11 stock market pullbacks of at least 10% not tied to a recession, only one of those turned into a full fledged bear market. But history can have a hard time factoring in extenuating circumstances like ones that showed up last week.
00:01:24
>> People are a little concerned about one of the reasons that investors have pointed to for this latest correction, is this sharp unwinding of this volatility trade, the bets against volatility. Are there more skeletons in the closet when it comes to that trade that could lead to further unwinding of more positions that could drive stocks down deeper?
00:01:46
>> As one analyst put it, until Wall Street knows the answer to that question, totally ruling out a bear market would be foolish.