At one time not very long ago, the stock market was considered a predictor of the economy. Historically, one could reasonably expect to see the stock market beginning to move in anticipation of economic trends roughly six to nine months in advance. But in the years since the financial crisis, stocks have gone from a predictive mechanism to one that is now highly reactive to what is being fed to it on any given day. And the events that took place in stocks over the last two trading days showed how much this transformation from predictive to reactive is embedded in today’s market.
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