Wall Street’s improbable summer rally has given way to scattershot yet bullish early August momentum. Analysts are cautioning investors against chasing what may be a classic “sucker’s rally.”
: The Fed’s moves to tame inflation come as the economy is sending decidedly mixed signals about growth. Markets have been whipsawed by monetary tightening, but have recently priced in the possibility that faltering growth could nudge the central bank into an easing campaign — something Fed officials have openly dismissed.
Meanwhile, investors have cheered this week's data, suggesting inflation could be cooling, which could eventually prompt the Fed to pivot...in response to inflation fears, but have retreated lately in the face of slowing growth. On Thursday, short-term interest ratesAlas, the rebound appears to be “an impressive rally in what is still a bear market,” David Donabedian, CIO at CIBC Wealth Management, tells Axios.
Nicholas Colas, co-founder of DataTrek Research, wrote on Thursday that “we still like stocks but worry the current rally is overdone.”Whether gnawing recession fears indeed force the Fed into a pivot, which after last month’s white-hot job creation appears unlikely but not impossible. “The bond market seems to be saying that there is no free lunch,” wrote Katie Nixon, CIO for Northern Trust Wealth Management in a. “The labor market will give the Fed the green light to press on, but the cost will be slower growth.”
And CIBC’s Donabedian warns that “inflation can be murdered … but you need a serious weapon to do it,” he said, alluding to higher rates.
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