The NASDAQ forecast for May is now available. The forecast model projected a sideways movement that would trend lower due to the Fed’s raising interest rates to combat rising inflation. The figure shows the NASDAQ performing poorly in the second half of 2022.
What Are the Factors Influencing the Markets?
The US economy appears to be slowing. Concerns about future economic development have been heightened by high inflation, rising commodity and energy prices due to the Russia-Ukraine conflict, and signs that demand is slowing. The Federal Reserve has begun tightening monetary policy to limit inflation. To what extent this combination will slow the economy, perhaps into recession, is unclear. This shows an economy under pressure because prices rise quickly to hinder economic development.
When Russia invaded Ukraine, no one could have forecast the length of the war or its global impact. The economic impact of the conflict is becoming clearer, and the future is bleak. Because of the conflict between Russia and Ukraine, problems with supply and demand are getting worse, consumer confidence is falling, and global economic growth is in danger.
Rapid interest rate increases may actually cause a recession rather than simply slow inflation and keep the economy growing. High interest rates reduce demand. Prices have soared since January. Slowing consumer spending hurts the economy and hurts corporate profits. At the moment, the economy unexpectedly contracted in the first quarter, but the strength in consumer spending eased fears of a recession.
How to Make Money Investing When Inflation Rises
Stock investing becomes more strategic as inflation rises and the Ukraine-Russia crisis worsens. Value stocks and commodities benefit from inflation. A high earnings-to-price ratio characterizes value stocks. During inflation, value stocks beat growth stocks. Productivity increases as demand increases. Commodities are seen as safe haven assets in uncertain times. But commodity prices are extremely volatile. To succeed, you must choose stocks carefully.
The May SP 500 Forecast Model
You may find more information about the S&P 500 May forecast model by visiting this page.