Stock Rally Faces a Wall of Risk in Fed, Jobs and Midterms
After surging almost 8% this month, the S&P 500 now confronts a central bank decision, the monthly employment report and an election over six days.
A bear-market interlude has opened the door for short-term speculation.
Photographer: Michael M. Santiago/Getty Images
The latest bear-market rally in US stocks has brought investors off the sidelines and provided a welcome reprieve from three quarters of gloom. But traders now need to ask themselves whether the risks continue to justify the potential returns.
The S&P 500 Index has rallied 7.9% since Oct. 12, helped by hardy corporate earnings, stabilizing US Treasury yields and a sense that the sell-off had gone too far. The rally was widely predicted, most prominently by Morgan Stanley strategist Mike Wilson, who characterized it at the time as a “tactical” call, not a sign of a fundamental turning point in the outlook for equities.