The latest employment numbers have left some experts arguing that the Fed may be getting ahead of themselves with interest rate hikes.
Outlook
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There is an old saying that stocks take the stairs to the roof but the elevator to the basement. As with many market adages, it's not exactly true, but there is sound behavioral logic behind it.
Conservative allocations and under-exposure to equity and growth assets could mean many investors have not fully participated in this year's equity rally and that there is more fuel for an advance.
Investors are on edge, eager to protect their unexpected gains, and are anxiously awaiting the titular recession that may or may not arrive this year. Most economists expect a recession in the next 12-18 months.
Stocks surged higher in the closing days of a holiday-shortened trading week, ignited by a political resolution on raising the debt ceiling and a strong employment report.
The Fed was guiding the markets into thinking this was potentially the last rate hike in this cycle.
The debt ceiling saga is unfortunately still ongoing, but definitive progress has been made. According to reports, the Biden Administration and Congressional Republican negotiators have agreed to a debt ceiling/budget deal.
Stocks rallied last week with growing confidence over reaching a deal on raising the debt ceiling and avoiding a technical debt default by the U.S.
The week got off to a quiet start as investors waited on April's two key inflation reports, but stocks broke out of their lethargy and moved higher after consumer prices rose less than forecasted.
The Fed's recent actions have led to a reevaluation of what it means to 'fight the Fed,' and it's crucial for investors to understand the difference between a trading opportunity and an investable rally.
When one of your stocks gets a takeout offer, it's natural to wonder what to do next. In the case of Ruth's Hospitality Group, the company received a merger agreement from Darden Restaurants, which would acquire Ruth's shares at $21.50 per share. As an investor, you need to consider the potential outcomes and make a decision based on your investment goals and risk tolerance.
In the event of a non-resolution, market reactions could continue to exude extraordinary volatility with very rapid moves in short-term rates and sharp drawdowns in equities, commodities, and other risk assets.