World Bank Report Sends U.S. Stock Market Lower
Okay, so it is probably more than just the World Bank reports sending the U.S. stock market lower. Generally, investors in the U.S. don’t really care about what the World Bank thinks. The body is kind of a joke on Wall Street. However, the latest information from the World Bank is underscoring concerns that many investors already have.
The World Bank just revised its forecast for the global economy in 2009. Originally, the World Bank expected the global economy to shrink by 1.7%. The revision to that forecast, though, predicts a larger contraction — of 2.9%. As a result, concerns that center around a slow economic recovery are once again paramount on the stock market. These concerns have been surfacing since the talk of “economic green shoot” began weeks ago, but the World Bank report seems to have effectively shut the door on optimism with regard to a speedy economic recovery.
Many have been warning that the recent gains by the stock market were merely a bear market rally, and that the market was overbought for the fundamentals of the economy at this point. And it does appear, with the Dow down more than 150 points today (after losses last week), that recent gains on the stock market were premature. For short-term traders, it is time to take profits, and sell, waiting to buy again if the market dips lower.
For many long-term stock traders, though, now is still a fine to buy fundamentally strong shares that will likely advance once the recession truly does come to an end, and economic recovery start. It is important to note that the end of the recession will not mean that the economy has recovered. Indeed, the end of the recession will only mark the beginning of the economic recovery.
Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.
