What's Ahead for the Stock Market
Inflation, GDP, and predictions.
Good morning investors,
The gold standard of indexes, the S & P 500, is down nearly 21% year to date. Marking the worst start of the stock market in 52 years. Before now, the last time the stock market dipped this hard this fast was in 1970.
The U.S. Beauru of Labor Statistics released June’s inflation reading on the day of writing this. Coming in at a +1.3% change month over month, totaling +9.1% inflation in the past year.
On the surface, it’s not looking good for the middle-class American, especially if you're looking to retire. But, what does the market have in store for the rest of the year?
source: U.S. Bureau of Labor Statistics
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The recent volatility in the stock market has stumped many economists. Making predictions 3-6 months from now tough to predict with any sort of accuracy.
Considering that October is historically a slow month, there is a chance that the market could slump further before recovering.
JP Morgan recently has said that the movement in individual stocks has singled an 85% chance of coming recession.
However, predicting a recession is notoriously tricky, being that most who try are typically wrong. If we look back at history, of the 23 times that stocks fell in the first half of the year. They began to rise in the second half of the year 12 times.
We will know for sure if we are in a recession on July 28 when the U.S. Bureau of Economic Analysis releases the numbers. It’s a funny thing how we don’t know if we are in a recession until after having been in one.
The stock market's performance isn’t necessarily tied to the impending recession. But, when you look back half a century, you’ll find that 83% of the time, there is a bear market; a recession follows.
In my opinion, the stock market is more likely to start bouncing back to previous highs when inflation comes down & the federal reserve eases the tightening of monetary policy.
Inflation coming down, and the federal reserve easing monetary policy will go hand in hand. However, that’s not to say that rising interest rates will combat inflation effectively.
All of this being said, most major banks like Goldman Sachs, BMO, and Morgan Stanley are predicting that the S & P 500 will gain in the latter half of the year by as much as 15%
Educating yourself is the first step to protecting yourself against a recession. Knowing how it’s caused, why it’s happening, and what you can do are all vital in defending against an economic downturn.
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As always have a great day, and remember to live in the moment.
