Market Rollercoaster: S&P 500 Faces Challenges as Fed’s Influence Looms
In a wild ride roughly a year after the S&P 500 hit rock bottom, money managers find themselves navigating a bumpy terrain as expectations mount that the Federal Reserve will keep interest rates firmly in place well into the next year.
Despite a Friday rally that snapped a four-week losing streak, over 180 stocks in the S&P 500 are currently trading below their values from 12 months ago. In just over two months, more than a third of the index’s gains for the year have evaporated, sparking concerns among investors and shaking confidence in the market’s stability.
Bank of America strategist Michael Hartnett isn’t mincing words, advising clients to step back from U.S. stocks as he believes the bear market has some unfinished business.
As the market rollercoaster continues, technical analysts caution that if the S&P 500 slips below 4,200, there are few safety nets for buyers to intervene. The index closed at 4,309 on Friday, leaving it vulnerable to a potential slide to its March lows around 3,900 — or possibly even lower. To regain control, the bulls might need the S&P 500 to firmly hold above its June lows of around 4,350.
Despite these challenges, it’s important to note that the S&P 500 is still up more than 12% for the year. The recent market turbulence is attributed to concerns about interest-rate risks stemming from the economy’s persistent strength rather than an impending slowdown that could dent corporate profits. The market’s resilience, evidenced by Friday’s gain amid unexpectedly strong employment data, suggests that despite the bumps, the S&P 500 may still have some fight left in it.
