Looking Behind The Recent Stock Market Drop

The last few weeks have seen a lot of volatility in markets. Equities have sold off and bonds have pushed up strongly as concerns about the sustainability of the US tech-led rally have been joined by worries that the US economy is heading for recession. The US economy does appear to be cooling but recent, slightly-disappointing, data needs to seen in the context of resilient US growth. The strong run for stocks linked to artificial intelligence has needed ever more impressive revenue growth to keep up lofty expectations, increasing the chance that disappointing updates would trigger some selling.

Although a US recession cannot be entirely ruled out, the most likely scenario remains slower economic growth in the US, as inflation returns to target, and gradual rate cuts. Despite the selling in equity markets, recent economic and corporate updates have done little to change the outlook.

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Market_Note_Update_on_Market_Volatility_August_2024.pdf

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This post contains information produced by FE Investments and opinions based on current market conditions, which we feel are relevant at the current time. This document has been prepared for general information only and is not guaranteed to be complete or accurate. It does not contain all of the information which an investor may require in order to make an investment decision.