Stock market: More carnage to come, economics professor says

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University of Maryland economics professor Peter Morici says the stock market will continue to see “carnage,” but will eventually correct itself.

“There is more carnage to come, but the market will recover. We are going through a correction, which is long overdue,” he told FOX Business’ David Asman on “After the Bell” on Monday.

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The Dow Jones Industrial Average continued to plummet on Monday, falling a record 1,175 points, wiping out its 2018 gains.

President Donald Trump’s tax reform plan has been credited to boosting confidence in the economy and energizing investors.

Many Republicans, including Trump are confident that the lowering of the corporate tax rate to 21% from 35% will entice companies to bring back money from overseas. Apple (NASDAQ: AAPL) promised to spend $350 billion in the U.S. over the next five years, on the heels of the passing of the GOP-backed tax overhaul.

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However, Morici is skeptical that the tech giant and other companies will immediately invest their money back into the U.S. economy.

“I wouldn’t count on a lot of that money coming back, they are going to pay taxes on that money, but they’re going to leave it where it does the most good. Remember somebody like Apple already has a flush balance sheet, they don’t need any more money here and that applies to many companies,” he said.

Despite big tech companies’ record breaking revenues and profits, Morici said, the balance sheets indicated that the companies wouldn’t be able to match those results.

“I think they will fix their problems and meet their challenges, but there are a lot of headlines around the world that indicated that big tech disappointed, we’ve been riding them intensively up this market. They’ve been the lead horses and now we can’t expect that from them so quickly quite so soon,” he said.

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