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Investors now have a factor to consider beyond the pace of inflation: Could the next sign of sputtering economic growth send stocks into a tailspin?
Aug. 9, 2024, 5:04 a.m. ET
After a wild week in the markets that rekindled fears about the strength of the U.S. economy, investors are wondering what comes next.
Until recently, Wall Street was focused squarely on inflation, hoping that its slowdown would lead the Federal Reserve to cut interest rates, giving support to stocks. The recent havoc has added an additional consideration: the risk that markets could tank in response to signs that the economy was slowing too fast.
For now, markets seem to have recovered a sense of calm. The S&P 500 index recorded its biggest gain in nine months on Thursday. It is still on track to end lower for a fourth consecutive week, but only marginally, a significant turnaround after a global rout on Monday.
Investors will be tested in the next few weeks. New data on U.S. inflation is set for release on Wednesday. A week later, Jerome H. Powell, the Federal Reserve chair, is scheduled to give a speech at a marquee economics forum. Wall Street will anxiously await what he says about markets and the economy.
Earnings reports due this month from bellwethers like Walmart will also give hints about the strength of the consumer underpinning the economy, while results from the chipmaker Nvidia will be pivotal given influence of tech giants over the S&P 500.
Investors are braced for potential turmoil.
“We’re not over this yet,” said James Stanley, a senior strategist at StoneX. “We’re not through the woods.”
