The global rally in stocks that began in March has stalled.
US stocks have been flat for a month and the rest of the world is pulling back after surging past the U.S. market over the past few weeks.
After gaining 40% from the early March lows, the SPDR S&P 500 ETF (SPY) has been in a decline over the past 6 trading sessions and is now back to where it was trading a month ago.
Stocks outside the U.S. had rallied even stronger off the March bottom. After gaining 60% through mid-June, the Vanguard All World ex-US ETF (VEU) has pulled back 8%.
Some investors are concerned with the progress of economic recovery while others feel that the stock markets gained too much ground too quickly and got ahead of themselves. The World Bank recently came out with a dour forecast for global growth. Monday’s report said that the global economy could contract at a 2.9% rate this year, worse than the 1.7% contraction the organization had forecast earlier.
SPY is market-cap weighted and includes 500 U.S. companies with market caps in excess of $5 billion. VEU tracks an index of approximately 2,200 stocks of companies in 47 countries, from both developed and emerging markets around the world.