A Bear Market in Stocks Is Becoming Entrenched. These Signals Show Why
US stocks sank as Jerome Powell gave a short and clear message at the Jackson Hole forum last month that rates will stay high for some time, pushing back against the idea of a Federal Reserve pivot that could complicate its war against inflation.
Photographer: Michael Nagle/BloombergThe US stock market is trapped in a downward path marked by lower highs and lower lows. It’s a cycle that this week’s Federal Reserve policy decision and economic projections could help cement for the rest of the year. I’m watching five signals that are critical in what stocks will do next.
The US stock market has softened considerably since the S&P 500 broke through 4300 in August. Those arguing that a new bull market was in the making had to contend with a rally of only 17% from June’s bear-market low before selling began again. While the Nasdaq managed to rally the fabled 20%, stocks remain in a downtrend path established at the beginning of the year, with lower highs and lower lows. That’s not a bull market.