When U.S. investors return from the long Labor-Day weekend, history indicates they’ll be facing the weakest time of the year for the S&P 500 index.
“Recession fears are the most likely trigger of a retest of the June lows,” said Ed Clissold, chief U.S. strategist at Ned Davis Research, in an Aug. 31 note. “From a seasonality perspective, a retest could come in the next several weeks.”
Vanguard Group said in a Sept. 1 report that it downgraded its forecast for U.S. economic growth this year after two straight quarters of contraction. The firm now expects economic growth of 0.25%–0.75% for full-year 2022, down from its estimate last month of about 1.5%. “The average non-recession bear lasts about seven months and has declined 25% , putting the January – June drop in line with the typical case,” Clissold wrote in the Ned Davis note. “Conversely, the average recession bear has lasted about a year and declined a mean of 35%.”
The “vigorous” rally in stocks seen earlier over the summer had reflected “too much optimism given we’re still in the early stages of fighting inflation,” said Crossmark’s Doll. Although he thinks inflation has peaked, Doll predicts that its continued decline this year will likely be irregular and finish 2022 above the Fed’s 2% target.
Ahead of Powell’s Jackson Hole speech, the market narrative had switched away from the Fed fighting inflation through aggressive rate hikes to, “when are they going to pivot?” said Steve Sosnick, chief strategist at Interactive Brokers. But using a relatively short speech, which had “no ambiguity,” Powell turned the focus back to monetary tightening and the Fed’s unfinished fight with inflation, sending “a very powerful message to the market,” said Sosnick.
But intermediate-term and long-term breadth needed to follow to confirm a bull market, he said, and without that confirmation, “a retest cannot be ruled out.”
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Bonds enter first bear market in at least 30 yearsThe bond market has entered its first bear market in more than 30 years.
Read more »
Trading on 'Goldilocks' jobs report may be hazardous as S&P 500 encounters stiff technical resistanceAnalysts described the report as “Goldilocks,” but trading on the jobs data and the glimmer of hope that the world’s largest economy might avoid a recession could be “hazardous,” one expert said.
Read more »
STOCK MARKET NEWS: Dow, S&P, Nasdaq sink despite jobs additions, Lululemon jumps, oil falls to $86Stocks ended the day and week lower in what has been a week of choppy trading amid mixed economic data. FOX Business is providing real-time updates on the markets, commodities and all the most active businesses on the move.
Read more »
Satellites watch Europe dry up in devastating drought that may be the worst in 500 yearsIt's the continent's worst drought since the Middle Ages.
Read more »
Bitcoin market dominance plumbs 4-year lows as BTC price ditches $20KA sub-$20,000 weekend begins for Bitcoin as market cap share dwindles.
Read more »