A hefty majority of experts in a recent Bankrate survey say the stock market is overdue for a correction – a drop of at least 10 percent from recent highs – and investors can expect to see one within the next six months. Bankrate’s Fourth-Quarter Market Mavens survey reveals that 70 percent of analysts think a correction is imminent, and it also reveals why these experts think so.

Bankrate’s survey showed a broad-based belief that the S&P 500 Index would fall in the near term:

• An overwhelming 70 percent of respondents said the market is overdue for a correction, any day now or within the next six months.
• 10 percent said that a correction wasn’t imminent but expected it to happen within the next year.
• 20 percent of respondents said they didn’t know or provided another response.

The results may be a bit shocking, since every single analyst also expected the S&P 500 to rise by the end of 2022, according to the survey. Actually, these market analysts expect the index to grow nearly 8 percent by the end of next year, just a bit below historical levels.

Forecasts and analysis:

This article is one in a series discussing the results of Bankrate’s Market Mavens fourth-quarter survey:

Why are experts expecting the stock market to correct?

The reasons these experts are expecting the market to pull back are varied, but some themes emerged from the responses. These include rising interest rates and the overvaluation of stocks. The S&P 500 has had what seems like an almost uninterrupted run since the bottom in March 2020.

Reasons to expect a drop now or within six months

Most respondents said the market was overdue for a correction and we could see one within the next six months. Some analysts pointed to dynamics around the new year, and market watchers are also eyeing the Federal Reserve’s moves on interest rates very closely.

“Investors are sitting on large capital gains and deferring sales until the new year,” says Michael K. Farr, CEO, Farr, Miller & Washington. “This deferred selling combined with a Fed that’s determined to remove accommodation and an historically weak quarter for markets, and the elements for a long-awaited pull-back are present.”

Others point to a range of issues that could plague markets in the next two quarters.

“Expect the first six months of next year to be volatile as global markets continue to work through supply chain adjustments,” says Dec Mullarkey, managing director, SLC Management. “Therefore, concerns on growth and inflation are likely to flare …….

Source: https://www.bankrate.com/investing/market-mavens-survey-stock-market-correction-december-2021/