Abhishek Sharma
Works at FreeBLOG
The US economy appears to be slowing down, which could potentially have negative consequences for the stock market. Investors are paying close attention to economic data to determine whether the Federal Reserve will continue raising interest rates or pause its rate hikes.
Several economic indicators are signalling trouble. In March, the ISM survey showed a contraction in manufacturing activity, with all components of the index dropping below 50 for the first time since 2009. Employment data also indicates a weakening in the labour market, with only 145,000 jobs added in March, missing expectations by 65,000 and significantly lower than February's 261,000 jobs.
Oscillating Amid Extremes: What Investors Should Know About the Current Stock Market State
Global news reports suggest other economic indicators are also pointing towards weakness. Job openings fell below 10 million in February for the first time since May 2021, and weekly jobless claims exceeded analysts' expectations. The Federal Reserve Bank of Atlanta has lowered its GDP forecast significantly, now predicting just 1.5% growth in the first quarter compared to its earlier forecast of 3.5%.
Retail sales growth is also showing signs of a slowdown. In February, retail sales declined by 0.4%, and this weakness could continue into March based on Costco's results, which reported a 0.9% decline in retail sales growth.
The Federal Reserve's president, Loretta Mester, stated that interest rates must increase to 5% and remain there for some time to combat inflation. However, some experts are concerned that the Federal Reserve may be overdoing its tightening policies, and this could lead to a more significant economic breakdown, which would spell trouble for both the stock market and the economy.
According to world business news, the stock market is consolidating sideways and is in a "watch" phase as it waits to see if the Fed will stop raising interest rates and if business earnings results will hold up as well as they have over the last year. Markets are currently in an active watchful waiting state, and the prudent route is to oscillate amid extremes of messaging from the bears and bulls before making a final choice.
The US economy appears to be slowing down, which could potentially have negative consequences for the stock market. Investors are paying close attention to economic data to determine whether the Federal Reserve will continue raising interest rates or pause its rate hikes.
Several economic indicators are signalling trouble. In March, the ISM survey showed a contraction in manufacturing activity, with all components of the index dropping below 50 for the first time since 2009. Employment data also indicates a weakening in the labour market, with only 145,000 jobs added in March, missing expectations by 65,000 and significantly lower than February's 261,000 jobs.
Oscillating Amid Extremes: What Investors Should Know About the Current Stock Market State
Global news reports suggest other economic indicators are also pointing towards weakness. Job openings fell below 10 million in February for the first time since May 2021, and weekly jobless claims exceeded analysts' expectations. The Federal Reserve Bank of Atlanta has lowered its GDP forecast significantly, now predicting just 1.5% growth in the first quarter compared to its earlier forecast of 3.5%.
Retail sales growth is also showing signs of a slowdown. In February, retail sales declined by 0.4%, and this weakness could continue into March based on Costco's results, which reported a 0.9% decline in retail sales growth.
The Federal Reserve's president, Loretta Mester, stated that interest rates must increase to 5% and remain there for some time to combat inflation. However, some experts are concerned that the Federal Reserve may be overdoing its tightening policies, and this could lead to a more significant economic breakdown, which would spell trouble for both the stock market and the economy.
According to world business news, the stock market is consolidating sideways and is in a "watch" phase as it waits to see if the Fed will stop raising interest rates and if business earnings results will hold up as well as they have over the last year. Markets are currently in an active watchful waiting state, and the prudent route is to oscillate amid extremes of messaging from the bears and bulls before making a final choice.
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