Despite the nicely positive year the S&P 500 fell 4.9% in September as my summer warnings of at least short-term trouble for stocks seem to be coming to fruition. At its worst, the market has seen an 8.5% pullback. An interest rate-induced recession continues to be top of mind for investors with 30yr mortgage rates now approaching 8% Recall, last month I finished up this newsletter section by saying, "under the surface, the action is much weaker than the headline indices would suggest... It's likely this correction has more room to run..."
So, are investors right in thinking a recession will finally land, and that's why we've been headed lower lately? Perhaps. Breadth has struggled since the summer and the short-term trend has now flipped to down. That said, it's awfully tough to see lasting market moves lower with sentiment already this negative. As the old Wall St. saw goes, "What everybody knows on Wall St. isn't worth knowing." As I mentioned above, let's listen to the market and not the headlines.
Comments