The reality may have disappointed those hoping that Donald Trump's return to the White House would propel the U.S. stock market to new highs — and, more importantly, help sustain those gains. Since February 20, the S&P 500 index has been on a downward trajectory.
As many have echoed, the main concern is the growing fear among investors that the U.S. economy could slip into recession. Trump's trade wars, which could lead not only to an economic slowdown but also to rising inflation, appear to be the main culprits for this anxiety.
According to the latest Survey of Consumer Expectations, inflation is expected to be 3.1% a year from now, just slightly rebound from the 3% forecast in January. The Fed's long-term inflation target is 2%, so the regulator will likely maintain a hawkish stance unless the economy shows signs of slipping into recession.
And the latter is exactly why markets expect we will ultimately see more rate cuts this year than expected, possibly as early as this summer or even in May. However, Jerome Powell recently stated, “Tariffs can increase inflation, and the Fed needs time to assess their impact.”
Will this downward trend continue?
Recently, Wells Fargo and Deutsche Bank projected the index could hit 7,000, while Morgan Stanley forecasted 6,600, and JP Morgan predicted 6,500. However, as time passes and Trump’s policies continue to create uncertainty, these overly optimistic projections have been revised downward.
In addition to trade tensions and rising inflation, which are likely to keep markets nervous, the US stock market continues to trade above long-term averages due to the heavy weighting of the IT sector. Thus, there is still room for further declines in the S&P 500 and the Nasdaq.
As for Trump's promised economic boosts-such as ending all wars, cutting taxes, balancing the federal budget, and bringing manufacturing back to US soil-they will not be easy to achieve. How, for example, can you cut the federal budget by one-third while maintaining high economic growth?
However, keep in mind that any short-term market correction could be followed by upward swings, as is often the case with volatile markets. The market's ability to recover after such declines may depend on the broader economic environment, including geopolitical risks ahead.
In particular, Trump's implementation of retaliatory tariffs, expected around April 2, could send more shock waves through the market, triggering further uncertainty. Investors are not known for their nerves of steel, and fear and caution will likely remain strong themes in the coming weeks.
This article was written by FL Contributors at www.forexlive.com. Read More Details
Finally We wish PressBee provided you with enough information of ( Has the U.S. stock market bottomed yet? )
Also on site :
- Jury begins deliberations in Mike Lindell defamation trial in Denver over election conspiracies
- Israeli strikes on Iran ‘completely unprovoked’ – Moscow
- Prince William Suffers Devastating Personal Loss