The S&P 500 reached an all-time high on June 20, pushing the benchmark index up to nearly 18% on the year.
That’s reason to cheer, in my opinion, and most analysts believe the US Federal Reserve’s shift to a more dovish monetary policy, including possible rate cuts later this year, is a big reason why.
![](https://investing.interactiveadvisors.com/content/2019/06/sp-record.jpg)
Yet it’s worth remembering why the Fed has suddenly shifted gears in the first place: There’s growing evidence that the record-long US expansion is losing energy.
Bearish Sentiment
While the US stock market is hitting the high notes, investors are scarcely in a buoyant mood.
As Bespoke Investment Group analysts pointed out in a recent post, the AAII weekly sentiment survey is “around 10 percentage points off of where it stood the last time the S&P 500 was at these levels.”
![](https://investing.interactiveadvisors.com/content/2019/06/sp-sentiment.jpg)
Earnings Slowdown
And there’s no denying the big falloff in US corporate earnings since last year, thanks to rising global trade tensions and slower growth at home.
![](https://investing.interactiveadvisors.com/content/2019/06/sp-earnings.png)
Synchronized Slowdown
In fact, global growth around the world is also taking a hit as the tariff war between the giant US and Chinese economies is having a ripple effect on manufacturing worldwide.
![](https://investing.interactiveadvisors.com/content/2019/06/sp-manufacturing.jpg)
Takeaway
In April, the IMF slashed its global forecast to the lowest point since the 2008 financial crisis.
Economists at the IMF see the U.S. economy decelerating to 2.3% this year, versus 2.9% in 2018, and to 1.9% in 2020.
A booming stock market is a wonderful thing. Yet, in my opinion, at some point these negative trends may be reflected in stock prices.
Photo Credit: Zooey via Flickr Creative Commons