The stock market is currently undergoing a correction, according to financial expert Josh Brown, despite the major indexes not yet reflecting significant changes. Appearing on CNBC’s “Halftime Report,” Brown pointed out that the ongoing correction isn’t evident to many investors because it hasn’t significantly affected the “Magnificent Seven” tech stocks, which have been central to recent market performance.
The S&P 500 recently reached an intraday high of over 6,900 for the first time, marking a more than 15% increase year-to-date. Nevertheless, Brown cautioned that this overall uptick conceals underlying weaknesses within the market. He noted that over 30% of S&P 500 stocks are trading more than 20% below their 52-week highs, indicating that many shares are effectively in a bear market. Additionally, as of Tuesday, approximately 6.5% of the S&P 500 stocks were at their 52-week lows.
The internal market weaknesses became more apparent with the S&P 500 experiencing a decline of over 1% on Tuesday, largely driven by a drop in artificial intelligence-related stocks. Despite these challenges, Brown expressed optimism about the future market trajectory. He believes that some excesses need to be trimmed for the market to gear up for an end-of-year rally.
“This is what healthy bull markets do,” Brown remarked, suggesting that a bit of a reset is beneficial. He emphasized that these corrections could set the stage for renewed growth, which investors should welcome as a constructive signal moving forward.
