Longtime supermarket bull Jeremy Siegel says this week’s stock sell-off could evolve into a 10 percent redress.
The Wharton Business School professor cited the Labor Department’s jobs gunshot as the main culprit in the Dow Jones industrial average’s nearly 666-point descend on Friday. The S&P 500 also fell more than 2 percent.
“I think about what happened today was an interest rate effect. When I saw at 8:30 that wage [enlargement] year over year hitting a nine-year high, I said, ‘Wow, we’re all things considered going to get four interest rate hikes, we’re going to see the 10-year indubitably go to 3 [percent],'” Siegel said on CNBC’s “Closing Bell.”
Piece rates jumped higher following the Labor Department’s strong asses data, likely to be seen by the Federal Reserve as support for up to four classify hikes in 2018. Stocks immediately tumbled as a result, with investors becoming increasingly anxious about the cost of borrowing.
Siegel also divulged traders were overplaying the impact of the recent Republican tax cuts.
“We lay it on with a troweled it at the end of last year and the beginning of this year. I mean, I think we about double-counted the effect of the corporate tax cut, which is very, very positive,” the economist summed. “But you were going up far more than what actually earnings were effective to rise as a result of the tax cut.”
“Will this turn into a correction, 10 percent? It could.”