U.S. CEOs aren’t panicking despite the roller coaster ride of major Wall Street stock indexes nosediving, then rebounding over the past few days of trading. After plunging 1,175 points on Monday, the Dow rose by 567 points Tuesday—a percentage gain of 2.3% that represents its biggest rise since January 2016.
But for CEOs monitoring the markets, the correction wasn’t an enormous surprise.
A Chief Executive poll of 162 U.S.-based CEOs this morning showed that barely a quarter voiced having concerns over the market correction that started last Thursday. Rather, the greater majority say a correction was not only overdue, but needed.
Some have even qualified it as healthy, “get it out of the way and get on with growth and progress,” commented the founder and CEO of a mid-sized professional services firm who believes that deregulation, tax reform and a pro-business agenda will continue to bolster the economy throughout the coming year.
“Markets correct, it’s part of the cycle.”
While a few expect volatility to last a couple more days, possibly inching closer to a 10-15% pullback from recent highs, at the market open most believed it was already over. “Markets correct, it’s part of the cycle,” dismissed the CEO of a mid-sized manufacturing company.
And with the current fundamentals and the robustness of the economy, the idea that a small interest rate increase might destroy the market seems more like an uneducated overreaction, a panic that needed to be subdued before it got even more out of hand.
“A correction was bound to occur,” said the vice-chair of a small corporation in the technology space, “but the underlying strength of the economy is not a bubble, it’s definitive.”
The Federal Reserve Board and new chair, Jerome Powell, however, may want to take note that a rapid increase in rates is likely to shake confidence further, so a slower approach to raising interest rates might be in order.