"Stocks felt pressure from reports showing the U.S. economy may be stronger than economists thought. While that's encouraging news for workers and for people looking for jobs, it could make the Federal Reserve less likely to cut interest rates several times in the coming months."
""Buckle up," warned Jonathan Krinsky, chief market technician at financial services firm BTIG. Stocks look to be in their most vulnerable position since their April lows given how much complacency has built up and how the rubber band has recently been "as stretched as it gets in some parts of the market," Krinsky wrote in a research report."
"But a stronger-than-expected economy could remove some of the Fed's urgency, particularly because cuts to rates carry the risk of worsening inflation that's already stubbornly high. If the Fed doesn't cut rates as often as investors expect, it would empower criticism that the U.S. stock market is too expensive after rising so much, so quickly."
U.S. stock indexes declined for a third straight session as investors gave back earlier gains for the year. The S&P 500 fell 0.5%, the Dow dropped 173 points (0.4%), and the Nasdaq lost 0.5%, though all remain near recent record highs. Reports indicating the economy may be stronger than expected pressured markets by reducing the likelihood of multiple upcoming Federal Reserve rate cuts. The Fed recently delivered its first cut, and expectations for further easing had supported record rallies. A stronger economy raises concerns that the Fed will slow future cuts, increasing scrutiny of elevated equity valuations and market complacency.
Read at Fortune
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