SP 500 & NASDAQ Forecasts
The August SP 500 and the NASDAQ forecasts are now available. The SP 500 ended July at 4,130. It soared from its June low in the 3,600s. With the Fed still planning to raise interest rates and the economy showing signs of a recession, it’s not clear if stocks will be able to keep their recent big gains.
What Is Affecting the Markets?
The midterm elections may affect the markets. The stock market tends to struggle early in midterm years because Washington might change its policies. However, once the results are in at the end of the year, the market tends to bounce back.
The market benefited from Apple and Amazon’s optimistic forecasts. Apple sees strong iPhone demand, and Amazon expects higher third-quarter revenue. Their numbers and projections give the market hope that they can navigate tough times.
The U.S. economy unexpectedly shrank in the second quarter, but the Fed downplayed a recession. Inflation persisted. June’s CPI rose 9.1% year-over-year, the fastest rate in 40 years. The U.S. PPI rose 11.3% YoY in June, also more than expected. As a result, the Fed will likely keep raising interest rates to combat inflation.
How to Invest and Profit When Inflation Is Rising
The stock market has been volatile with the Fed planning to raise interest rates and the economy weakening. Therefore, market participants will decide if the economy can withstand higher interest rates without contracting. Expect stock market rotation, especially from goods to services companies. Consumer staples, utilities, and healthcare do well when the economy slows. Inflation favors value stocks and commodities. Value stocks have high earnings per share. However, commodity prices are highly volatile. To succeed, you must pick stocks carefully.