Investors are cautious heading into September, which statistically has proven to be the worst trading month for equities.
It was just earlier this month that investors were predicting the beginning of the next bull run. Then, stocks were building on their July gains, thanks to a combination of bearish sentiment fatigue and corporate and consumer resilience in the face of inflation.
This week, however, markets are digesting newer inflation-fighting comments from the Fed and a spike in the 10-year Treasury yield. This has contributed to declines in stocks. It’s a cycle that’s likely to continue through the rest of the year, according to Brad McMillan, chief investment officer for Commonwealth Financial Network.
“With inflation showing signs of peaking and with growth slowing, the economy is already responding to higher rates — meaning that fewer hikes in the future may be necessary,” he said in a note Wednesday. “When the data changes, so will expectations, and the market will react then as well.”
