Just when they think they're out of the woods, investors keep getting pummeled by a stock market that can't seem to make up its mind whether it's headed up or down.
After reaching a high of 2,873 in January, Standard & Poor's 500-stock index sank 10.2 percent through early February, putting the broad market index in official correction territory (defined as a drop between 10 percent and 20 percent from the peak). The bellwether index recovered but failed to get back to its previous high before sinking back to the correction low point in early April.
The S&P 500 has mounted an unconvincing rally since then, but it's often the case that just when investors start to think the worst is over, stocks experience another harrowing drop. So it's fair to ask: When will this correction be over?
No one can say for sure. Even if stocks claw their way back to the old high, we can expect another correction in short order, says Sam Stovall, chief investment strategist at market research firm CFRA. "We haven't done enough penance," he says.
And the market still has plenty to worry about, including a trade war with China, a real war in Syria, rising interest rates and inflation that is creeping higher.
Recently, Wall Street insiders have been particularly worried about the bond market. Although yields on 10-year Treasury notes have crept higher, the gap between yields on long-term bonds and short-term securities has been shrinking, which can presage economic weakness.
For now, economic underpinnings are strong. Kiplinger expects gross domestic product growth of 2.9 percent in 2018, up from 2.3 percent in 2017. Four out of five companies reported higher-than-expected profit growth as the first-quarter reporting season kicked off.
The most ominous sign for stocks might be that we're not worried enough. If the February decline was "the correction that scared nobody," says Doug Ramsey, chief investment officer of investment firm Leuthold Group, then the April downturn was "the retest through which investors contentedly snoozed."
This doesn't mean that investors should cash out. The consequences of leaving even an aging, jittery bull market too early can be costly, says Jeffrey Kleintop, chief global investment strategist at Charles Schwab. Amid the rising volatility of late-stage bull markets, annualized gains average 19 percent in the two years prior to the onset of a bear market, he notes.
You can manage market volatility with a diversified portfolio that holds domestic and international stocks and emphasizes sectors that tend to do well late in the game, including materials producers and processors, technology firms, and industrial companies.
(Anne Kates Smith is executive editor at Kiplinger's Personal Finance magazine. Send your questions and comments to email@example.com. And for more on this and similar money topics, visit Kiplinger.com.)