Markets have been whipsawing violently amid conflicting signals on the economy and rising recession fears. Investors should get ready for more turbulence and volatility in the days and weeks ahead.
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Volatility Reigns After Wild Week
• Last week, the S&P 500 saw both its worst and best single-day performances of 2023
• The wide swings highlight how "on edge" markets are right now
Conflicting Economic Signals
On the one hand:
• Fears of a potential recession are elevated
• Months of rising unemployment claims and other deteriorating data
On the other hand:
• Markets now cheer solid data as a sign the U.S. can avoid a contraction
• Any good news could spark a relief rally
Key Tests Ahead
• This week brings key reports on consumer prices and retail sales
• If inflation cools further and consumer spending holds up, markets may rally
• But upside surprises could reignite worries over higher rates for longer
Prepare for Turbulence
• Analysts warn we could see many more big up and down days
• Rather than placid conditions, expect extreme volatility near-term
Navigating the Whipsaws
• Make sure your portfolio is properly diversified for turbulence
• Trying to trade the narrative shifts is likely a losing game
• Stay disciplined and focused on long-term goals amid the choppiness
The path forward is uncertain, but getting ready for a market roller coaster appears the wise move for now.
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