Two Pillars of the Stock Market Just Became Two Reasons to Sell
- Trade hopes and Fed rate cuts helped fuel equity rally
- Investors see parallels to last year’s market toubles
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The conventional wisdom that the Fed’s next move would be down and the trade spat with China would end just got dealt a one-two punch.
Benchmark equity indexes have fallen from record highs since Federal Reserve Chair Jerome Powell pushed back against calls for a near-term rate cut and U.S. President Donald Trump threatened to ratchet up tariffs on imported Chinese goods. The catalysts sparked an ominous sense of déjà vu: In 2018, U.S. markets peaked just before Trump slapped tariffs on $200 billion in Chinese imports and Powell commented on how high rates would need to rise.