Investing.com – Investors are paying attention to signs that could mark the end of the rise in shares, which has persisted for five months, anticipating a possible correction. However, experts warn that the market could suffer an abrupt drop without prior signs.
Analysts from the bank JPMorgan (NYSE:), in a recent webinar, warned their clients about the risk of being surprised by a market downturn. The recommendation is for investors to diversify their investments and implement risk management strategies in order to protect themselves against a sudden correction driven by excessive optimism in high-yield stocks.
JP Morgan chief global equity strategist Lakos-Bujos emphasized that corrections can occur at any time, citing historical episodes of sudden declines. He illustrated a scenario where large funds begin a wave of selling, causing a domino effect that intensifies the market decline.
Stocks have benefited from robust corporate profits, enthusiasm about advances in artificial intelligence, a resilient US economy and signs that interest rates could be lowered. However, analysts signal that the market may have already absorbed this positive news.
They also noted that massive investment in fast-growing stocks, such as the so-called “Magnificent Seven,” often precedes a correction. Citing the recent drops in the share values of Tesla (NASDAQ:) and Apple (NASDAQ:), analysts question which company will be the next to face a devaluation and when it will occur.
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