Correction projection is 5-7% drop: Doll

APR 15, 2012
The current stock market sell-off might result in a 5% to 7% decline if trends from the past few years continue and fundamentals hold, BlackRock Inc. chief equity strategist Bob Doll wrote in a commentary released last week. “Since the current bull market began in early 2009, we have seen many short-term corrections of around 5% to 7% that have occurred without any serious worsening of fundamentals, so that range represents a possible starting point for any sort of near-term correction,” he wrote, noting that any such prediction is “always a guessing game.” BlackRock has been warning for several months that the market is due for some sort of correction, Mr. Doll wrote. Since the near-term high April 2, the S&P 500 has fallen about 3%. The disappointing labor market report for March, released April 6 when markets were closed for Good Friday, could spill over to the market, Mr. Doll wrote. Rising concern over the European debt crisis, a hard landing in China and the unlikely prospect of more stimulus programs coming from the Federal Reserve have been blamed for recent selling, he wrote. “None of these developments, however, represent any sort of significant change in economic or market fundamentals,” Mr. Doll wrote. But the jobs report serves “as a reminder that the United States is not about to transform into any sort of robust growth engine,” particularly with growth in most of the world slowing, he wrote. BlackRock predicts growth in the United States this year of between 2% and 2.5%. [email protected]

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