Review the latest Weekly Headings by CIO Larry Adam.
Key Takeaways
Is bad news becoming bad news for the equity market? For much of this year, investors cheered easing inflation pressures and softening economic data believing it would push the Federal Reserve (Fed) to cut interest rates. This, plus AI tailwinds, helped drive the S&P 500 to 38 record highs and a ~15% gain YTD. But, this week’s sentiment shift and market weakness (S&P 500 down ~4% from its recent peak) have been notable, particularly ahead of the Fed’s meeting and non-farm payrolls next week. So, the question is: Is bad news now bad news for equities once again or is this just a normal correction? Below we outline three building uncertainties weighing on the equity market and reiterate why we are cautious in the near term:
Bottom line | In addition to these building uncertainties, several other indicators suggest caution in the near term. While we remain positive on the equity market longer term, four other factors suggest weakness ahead:
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