Clouds may be gathering. Should investors be worried about a storm?
Let’s look at some factors that could trigger a market selloff in the weeks or months ahead.
(Note: I'm not saying a selloff is definitely going to happen—I want you to be prepared if it does.)
Factor #1: Stocks are trading near record highs
Stocks have posted multiple record closes, and the S&P has been trading well above its 200-day moving average. (1, 2) When stocks repeatedly push new highs, it’s not uncommon to see a pullback as traders take profits.
Factor #2: Investors are watching the Fed like hawks
Is a zombie recession coming? By that, I mean that renewed fears of a "hard landing" recession have emerged from the grave and are walking among us. Many analysts were convinced that the U.S. economy could achieve a coveted “soft landing,” but they might be overly optimistic.
What makes some economists worry about a recession?
Markets have been more volatile lately. What’s going on?
Let’s take a quick look at the factors that are influencing markets right now.
1. The bull market narrative has shifted
For months, investors have told a “Goldilocks” story of a strong economy, tamed inflation, and interest rates that were soon to drop. However, stronger-than-expected economic data and sticky inflation have now complicated the story, and investors have become wary.
