"Inflation remains almost 50% higher than the Federal Reserve's 2% target, signaling persistent economic issues despite soaring stock prices."
"Retail investors' exposure to stocks is in the 96th percentile in data going back to 1997, suggesting a potential market vulnerability."
"The equal-weighted S&P 500 exhibiting broader gains is a positive, but after a 30% rally off the market low, a breather may be warranted."
"With national debt nearing $37 trillion and escalating inflation concerns, the outlook for the stock market suggests that the path of least resistance may be downward."
The long AI-driven stock market rally that began in November 2022 is showing signs of weakness, despite some strong earnings from technology firms. Economic warnings include a troubling jobs report for July, high valuations of the S&P 500, and the Federal Reserve's reluctance to cut interest rates until September. Retail investor stock exposure is at an all-time high, raising worries about market correction risk. Although consumers are in good financial shape, persistent inflation and escalating national debt could negatively impact the market outlook.
Read at 24/7 Wall St.
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