Although stocks have climbed steadily for the last five years:
On Friday the S&P 500 closed negative year-on-year for the first time since 2012.
New Deal Democrat reminds us that stocks are a short leading indicator, while corporate profits are a long leading indicator. This implies that corporate profits will lead stock prices.
Corporate profits (in red, below) have been flat for a few years, so it’s not much of a surprise that stocks (in blue) would slow their upward trajectory and make some corrections.