Economics
There's an Upbeat Signal Buried Beneath the Stock Market's Surface
- Industrial, value stocks holding up better in this bear market
- Excess unwinding shouldn’t be mistaken for economic demise
Traders work on the floor of the New York Stock Exchange.
Photographer: Michael M. Santiago/Getty ImagesThis article is for subscribers only.
It’s as close to a sure-thing bet as markets ever offer. When the S&P 500 falls 20% or more, a recession is close behind. But economists whose dour calls for 2023 are being informed by this signal should look deeper into last year’s rout before betting the farm on it.
Twelve months of drubbing in stocks from Tesla to Amazon, Apple to Netflix have pounded the larger market relentlessly, sending the S&P 500 to its worst year since the financial crisis. Pundits are braced: Benchmark losses on this scale have usually meant a recession is inescapable, going by past bouts of bear-market signaling.