Stock Investors Pick the Wrong Exit in Emerging Markets

Here’s a brainteaser: While investors fret about trade wars and rate hikes, U.S. stock prices keep climbing.

Answer: Investors are indeed running for the exit — just through the wrong door.

Emerging-market stocks, not those in the U.S., are taking the brunt of investors’ fears. The MSCI Emerging Markets Index is down 7.7 percent this year through Wednesday, while the S&P 500 Index is up 5.3 percent. The EM index is also down 16 percent from its high on Jan. 26, just shy of the 20 percent decline that signals a bear market.

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Stocks’ Fundamental Swings Still Apply as Time Goes By

U.S. stocks have been shaky lately. Volatility spiked in February after years of calm, and the market continues to be bumpy. Meanwhile, the S&P 500 Index has gone nowhere this year, down 1 percent through Monday.

Investors, however, needn’t fear that the recent volatility will turn into a rout because “the fundamentals are strong.” Or at least, that’s the refrain Wall Street analysts never tire of crooning for investors.

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