With war breaking out in Eastern Europe and stocks already in the midst of a very poor start to 2022, there are many questions about what it all could mean for portfolios and the economy. In our latest LPL Street View, Ryan Detrick takes a closer look at these questions.
Historically, stocks have actually held up quite well in the face of previous geopolitical events. In fact, looking at some of the largest events over the last 70 years shows that stocks fall about 5% on average and make up the losses within two months. This isn’t to minimize the humanitarian crisis, but history does say if the economy can avoid a recession, stocks tend to take these horrible events in stride.
Lastly, the consumer remains quite healthy, suggesting a recession in 2022 is quite low. One other positive is the Federal Reserve could become more dovish by not hiking rates quite as aggressively as feared just a few weeks ago.
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All index data is from FactSet.
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