Most investors bracing for market correction this year

By Stocks FOXBusiness

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A majority of U.S. investors believe stocks are due for a selloff following their record run, saying a market correction is likely coming later this year.

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A survey from Wells Fargo Advisors and Gallup shows that 54% of investors expect a market correction—defined as a selloff of at least 10% from the market’s 52-week high. Still, only 40% are rebalancing their portfolio to brace for a correction, while 20% are buying bonds to reduce their exposure to equities.

“One of the consequences of a protracted bull market is, unfortunately, investor complacency,” said Heather Hunt-Ruddy, head of client experience and growth at Wells Fargo Advisors.

Concerns about a market correction are more subdued compared to 2014, when 58% of investors predicted a correction in the same survey. A year earlier, 62% were worried about a correction.

Stocks have routinely set new records this year. The S&P 500, which has set 38 records this year, was on pace to close at another all-time high Friday. Along with the Dow Jones Industrial Average, the S&P 500 was looking to post its sixth monthly gain in a row in September. Some investment strategists think the current bull market is short on runway and could be due for a breather.

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However, the market has thus far shown few signs of retreating, and traders have largely shrugged off moves by the Federal Reserve to unwind its crisis-era policies. The central bank announced that it will begin to shrink its balance sheet in October, and economists forecast another interest rate hike in December.

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“The prescriptive Fed commentary has helped to prepare investors for additional rate hikes, and we do not see their well-telegraphed actions derailing the domestic equity bull market,” Sean Lynch, Wells Fargo Investment Institute’s co-head of global equity strategy, wrote in a note to clients.

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