Fact Check: Stock market is not crashing

The Claim: "Stock Market is Not Crashing"

Introduction

The assertion that "the stock market is not crashing" suggests a stable or improving market condition despite recent fluctuations. This claim requires careful examination, particularly in light of recent data indicating a decline in stock performance over several months.

What We Know

1. Recent Market Performance: The S&P 500 Index experienced a decline of 2.1% in October 2023, marking its third consecutive monthly drop, with reports indicating a cumulative decline of 5.9% from October 11 through the end of the month 13. The Dow Jones Industrial Average also fell by 1.3% during this period 6.

2. Economic Indicators: The U.S. economy showed growth of 1.2% in the third quarter of 2023, which is considered above-trend. However, manufacturing indicators, such as the ISM Manufacturing PMI, fell into contraction territory, suggesting underlying economic fragility 2.

3. Interest Rates and Market Sentiment: The prevailing sentiment in the market is influenced by expectations of sustained high interest rates, which have pressured both stock and bond markets 5. Concerns regarding U.S. government funding and geopolitical tensions have also contributed to investor anxiety 13.

4. Historical Context: Historically, stock markets have shown a tendency to bottom out in late October, which could suggest a potential for recovery following the current downturn 8.

Analysis

The claim that the stock market is not crashing must be evaluated against the backdrop of recent performance metrics and economic indicators.

• Source Reliability: The sources cited, including financial institutions like Confluence Financial Partners and Rothschild & Co, are generally credible, as they provide data-driven insights into market performance. However, they may have inherent biases based on their financial interests and the services they provide, which could influence their interpretations of market conditions 12.

• Methodological Concerns: While the data presented by these sources is factual, the interpretation of what constitutes a "crash" can vary. For instance, a decline of 2.1% over a month may not be classified as a crash in traditional terms, but it does indicate a negative trend. Furthermore, the reliance on specific indices (like the S&P 500) may not provide a complete picture of the broader market, which includes various sectors and asset classes.

• Contradicting Perspectives: Some analysts argue that the market is merely undergoing a correction rather than a crash, pointing to the overall economic growth and potential for recovery as indicators of resilience 9. Conversely, others highlight the risks posed by high interest rates and geopolitical tensions as factors that could lead to further declines 35.

• Additional Information Needed: To fully assess the claim, more comprehensive data on market breadth, sector performance, and investor sentiment would be beneficial. Insights from a wider array of financial analysts and economic forecasts could provide a more nuanced understanding of the market's trajectory.

Conclusion

Verdict: False

The claim that "the stock market is not crashing" is deemed false based on recent evidence of declining stock performance, including a 2.1% drop in the S&P 500 in October 2023 and a cumulative decline of 5.9% over the month. While some analysts argue that the market is merely experiencing a correction rather than a crash, the consistent downward trend and economic indicators suggest a more precarious situation.

It is important to note that the definition of a "crash" can vary, and some may argue that a 2.1% decline does not meet the threshold for such a classification. However, the overall sentiment and economic conditions indicate significant investor anxiety and potential for further declines.

Limitations in the available evidence include the reliance on specific indices and the need for broader data on market performance and investor sentiment. As such, while the current evidence supports the conclusion that the claim is false, ongoing monitoring of market conditions is essential.

Readers are encouraged to critically evaluate information and consider multiple perspectives when assessing claims related to financial markets.

Sources

1. Monthly Market Recap: October 2023 - Confluence Financial Partners. Link
2. Monthly Market Summary: October 2023 - Rothschild & Co. Link
3. October 2023 Market Recap - Gateway Investment Advisers. Link
4. Market snapshot October 2023 | Macro Update - F&C Investment Trust. Link
5. Monthly markets review - October 2023 - Schroders. Link
6. Monthly Market Wrap: October 2023 - Nasdaq. Link
7. Just How Bad is the Stock Market's Current Sell-Off? - Investopedia. Link
8. CHART OF THE DAY: The stock market typically bottoms near the end of ... - Business Insider. Link
9. 15 Charts On the Surprise 'Everything Rally' for 2023 - Morningstar. Link
10. United States Stock Market Index - Quote - Chart - Trading Economics. Link